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Sabah Development Corridor (SDC) incentives extended
The SDC was launched on 29 January 2008 to accelerate the growth of Sabah’s economy. At the end of the year 2012, the Minister of Finance (MoF) approved a tax incentives package under the SDC to enable the Sabah Economic Development and Investments Authority (SEDIA) to promote Sabah as an ideal location for doing business and to attract local and foreign investors to Sabah.The following Exemption Orders were gazetted in respect of these incentives, on 31 December 2018 (see Tax Alert No. 1/2019):
(a) Income Tax (Exemption) (No. 11) Order 2018
The Order provides an exemption on statutory income derived from a qualifying activity (as defined) for a YA, equivalent to 100% of qualifying capital expenditure incurred by a qualifying company. The exemption applies to applications made to SEDIA between 20 November 2012 and 31 December 2020.
(b) Income Tax (Exemption) (No. 12) Order 2018
The Order provides a full tax exemption on statutory income derived from a qualifying activity (as defined) for each YA. The exemption applies to applications made to SEDIA between 20 November 2012 and 31 December 2020.
(c) Stamp Duty (Exemption) (No. 8) Order 2018
The Order provides a stamp duty exemption for any instrument chargeable with ad valorem duty for the transfer of real property used for the purpose of carrying on a qualifying tourism project (as defined). The exemption applies to instruments executed between 20 November 2012 and 31 December 2020.
The exemptions are subject to other conditions.
In Budget 2021, the Government proposed to extend the existing SDC tax incentives until 2022. To legislate the proposal, the following Amendment Orders were gazetted on 29 March 2022:
(a) Stamp Duty (Exemption) (No. 8) 2018 (Amendment) Order 2022 [P.U.(A) 74]
The exemption will now apply to instruments executed until 31 December 2022.
(b) Income Tax (Exemption) (No. 11) 2018 (Amendment) Order 2022 [P.U.(A) 75]
(c) Income Tax (Exemption) (No. 12) 2018 (Amendment) Order 2022 [P.U.(A) 76]
Both exemptions will now apply to applications made to SEDIA until 31 December 2022.