SME Boss, Malaysia just changed the investment incentive game.

From 1 March 2026, the New Incentive Framework (NIF) starts for Manufacturing. Services will follow in Q2 2026 (date to be confirmed).

Old days, many people chase “promoted list” and hope for Pioneer Status or ITA. Now NIF is different. It is outcome-based and tiered.

Now government will look at the following for approval :
High-value jobs. Local talent training. Strong local supply chain. Technology transfer. ESG readiness.

And under NIF, you can only choose one incentive:
STR (Special Tax Rate) or ITA (Investment Tax Allowance). Cannot take both.

STR provides a reduced corporate income tax rate (range depends on category and assessment outcome), with the guideline indicating 5%–10% (new investment) and up to 5 years. Yes! No more free tax holiday.

ITA provides an allowance of up to 60%-100% on QCE, claimable within an incentive period of up to 5 years, and the allowance may be utilised to offset 70%–100% of statutory income.

Key move for bosses : don’t wait until you “already start operation”. Once you issue the first sales invoice, you are considered commenced. Timing matters. For ITA, capex after submission date is the one that counts.

If your company is planning new factory, new line, big automation, or diversification in 2026, this is the moment to plan early and package your project properly.

Read the full content in our blog
https://www.ktp.com.my/blog/new-incentive-framework-nif-2026/2feb2026