Incentives & Allowances

The incentive for individuals to install renewable energy installations lie in the feed-in tariff rate. The Government has been very supportive of renewable energy by providing fiscal incentives in yearly budgets.

Fiscal incentives are available for companies and third party exemptions on equipment (e.g. solar PV and solar heating) are given to distributors or importers. This will lead to a reduction in the system price via exemption of sales tax or import duty.

Tax Relief
Generation of RE (Renewable Energy) for own use has been enhanced to ITA (Investment Tax Allowance) under the 2008 Budget.This means that companies which invest in BIPV for their own use can get ITA benefits in addition to the Capital Allowance (CA) that they normally enjoy. This is equivalent to a “double tax deduction”. The corporate tax rate is 25% for 2009 and beyond.

Current PS (Pioneer Status) and ITA incentives, in brief, are:
(a) For RE to be sold under the SREP (Small Renewable Energy Power) scheme:

  • PS ‐ 100% of investment against 100% of statutory income (taxable income) for 10 years, or
  • ITA – 100% against 100% of statutory income (taxable income) for 5 years.

(b) For RE to be used for own consumption:

  • ITA – 100% against 100% of statutory income (taxable income) for 5 years.

Sourced from SEDA Malaysia