Malaysia rolls out New Incentive Framework effective 1 March, starting with manufacturing sector

Summary

Malaysia will implement its New Incentive Framework (NIF) from 1 March 2026, beginning with the manufacturing sector and expanding to services in Q2 2026. The NIF replaces broad-based incentives with two mutually exclusive options per qualifying project: a Special Tax Rate (STR) or an Investment Tax Allowance (ITA) based on Qualifying Capital Expenditure (QCE). Incentives are awarded against measurable commitments assessed by the National Investment Aspirations (NIA) Scorecard, which weighs economic value creation, local talent development, domestic supply-chain growth, technology transfer and sustainability.

The framework adopts a tiered, outcome-based approach aligned with Malaysia’s New Investment Policy and the New Industrial Master Plan 2030 (NIMP 2030). It is part of a wider reform driven by the Ministry of Finance’s Taskforce on Incentive Review (TFIR) to streamline incentives and align with global tax standards, including the Global Minimum Tax. As MITI rolls out the NIF, it will stop accepting new manufacturing incentive applications under the Promotion of Investments Act 1986 (PIA 1986) after 28 February 2026, 3:00pm; existing approvals remain valid.

Key Points

NIF takes effect 1 March 2026 for manufacturing; services sector follows in Q2 2026.
Two incentive choices per project: Special Tax Rate (STR) or Investment Tax Allowance (ITA) tied to QCE.
Incentives are outcome-based and assessed via the NIA Scorecard (economic value, talent, local supply chains, tech transfer, sustainability).
Framework is tiered and aligned with the New Investment Policy and NIMP 2030 objectives.
TFIR-led reform aims to streamline incentives and meet evolving global tax standards (including the Global Minimum Tax).
Final deadline for new PIA 1986 manufacturing incentive applications: 28 February 2026, 3:00pm; existing approvals unaffected.
Detailed eligibility, assessment and application procedures are available on MITI and MIDA portals.

Why should I read this?

If you run, advise or invest in Malaysian manufacturing (or plan to expand there), this matters. The NIF changes how incentives are awarded — no more blanket perks: you pick STR or ITA, and you must show measurable outcomes. Deadlines are tight (last day for old PIA applications is 28 Feb). Basically, tweak your investment plans, applications and timelines now or risk missing the new rules.