Guidelines on Transition of MSC Malaysia Status Company to MD Status

Guidelines on Transition of Multimedia Super Corridor (MSC) Malaysia Status Company to Malaysia Digital (MD) Status

On 4 July 2022, the Government launched the MD initiative, which will succeed MSC Malaysia. This new initiative will drive digital transformations in focus areas that present important high-growth potential opportunities. The Government, through the Malaysia Digital Economy Corporation (MDEC) will award the MD Status to eligible companies which participate in and undertake MD activities.

Thereafter, MDEC published on its website the Guidelines on MD Status dated 30 June 2022. These guidelines provide an overview of the MD Status, including the eligibility criteria, conditions, the available benefits and incentives, as well as post-approval considerations (see Tax Alert No. 14/2022).

Following the above, MDEC has now published on its website the Guidelines on Transition of MSC Malaysia Status Company to MD Status (Guidelines), dated 29 December 2022. The 13-page Guidelines comprise the following paragraphs:

1.0       Introduction
2.0       Malaysia Digital
3.0       Expansion of location and removal of minimum office space requirement
4.0       Compliance to MD Status conditions
5.0       Other general conditions
6.0       Sustainable development goals
7.0       Benefits of MD Status
8.0       Post approval matters
9.0       Reporting and monitoring
10.0     Revocation of status
11.0     Surrender of status
12.0     Enquiries and support
13.0     Effective date

Some of the salient points are outlined below.

• As highlighted in an earlier Alert, under the MD initiative, companies are allowed to operate and undertake their approved activities (per the approval letter) in any location in Malaysia. Companies which used to be subjected to the minimum office requirement will no longer need to adhere to that requirement. The Guidelines stipulate that the above is effective from 25 March 2022.
• The company is required to continue to adhere to the existing conditions as stated in the approval letter and/or Conditions of Grants issued to the company. The existing conditions may include requirements pertaining to the following:
  • Approved activities undertaken
  • Number and/or percentage of knowledge workers (as defined)
  • Amount of salary
  • Amount of investment
  • Research & development expenditures
  • Paid-up capital
• Any variation to the conditions during the tax exemption period is subject to the approval of the National Committee on Investment.
• The company shall not transfer or assign the status or any benefits, rights and/or obligations thereunder to any third party.
• The company will continue to enjoy the offerings under the MD Bill of Guarantees (BoG). Existing approvals for the incentives and/or benefits under the BoG will continue to subsist subject to compliance with existing conditions.

The Guidelines are available at the following link:

Guidelines on Transition of MSC Malaysia Status Company to MD Status