For years, most Malaysian investors apply tax incentives through MIDA under the Promotion of Investments Act 1986. The familiar choices are Pioneer Status (PS) or Investment Tax Allowance (ITA).

From 2026, MITI is rolling out the New Incentive Framework (NIF), starting with manufacturing. This is not just paperwork change. It is a mindset change. Incentives are tied to measurable outcomes, not only how much you invest.

Very important deadline for manufacturing investors

28 February 2026, 3.00pm is the final submission time for new manufacturing applications under the old PS and ITA system.

✅Key differences you must know

Old system: Category driven
You start with “Is my project a gazetted promoted activity or product”. If yes, you proceed.

NIF: Outcome driven
You start with “What impact can my project deliver and can I commit to it”. NIF uses the NIA Scorecard. You must score based on contributions to national priorities.

PS vs STR
Old PS is easier to explain: partial tax exemption, commonly tax on 30 percent of statutory income for 5 years from Production Day.

Under NIF, PS is replaced by STR, a reduced corporate tax rate for a specified period. The guideline indicates around 5 percent to 10 percent for up to 5 years, subject to assessment outcome. Your benefit depends on your profit ramp up and approved terms.

ITA still exists, but entry is different

Old ITA is capex based, commonly 60 percent allowance on qualifying capex and can be utilised to offset up to 70 percent of statutory income.

Under NIF, ITA can be higher and more flexible. The guideline indicates up to 60 percent to 100 percent on qualifying capex, utilisable to offset 70 percent to 100 percent of statutory income, within up to 5 years. But approval is linked to scorecard outcomes, not capex alone.

More documentation and accountability
NIF expects clearer commitments, clearer monitoring, and stronger governance. Your incentive file becomes a full business plan pack, not only tax and financial projections.

✅What this means for SME investors

Timing becomes a tax strategy
If you want to apply under the old system, internal delays in approvals and budgets may become real tax cost.

Your submission becomes cross functional
You need operations plan, hiring and skills plan, technology roadmap, supply chain plan, sustainability initiatives. Finance alone cannot carry.

Your modelling must be more careful
Under NIF, you must choose one option, STR or ITA, and the selection is treated as final once accepted. STR vs ITA must be modelled properly based on profitability timeline, capex timing, losses, group position, and expansion plans.

Read the full content in our blog
https://www.ktp.com.my/blog/new-incentive-framework-nif-2026/4feb2026