New Incentive Framework

Malaysia is rolling out a New Incentive Framework (NIF) that represents a decisive reset of how investment incentives are structured, assessed and awarded. Announced under Budget 2026, the NIF will be implemented from Q1 2026 for manufacturing and Q2 2026 for services, replacing a largely rules-based system with a more strategic and outcome-driven approach. The reform reflects a clear policy intent: incentives are no longer standalone tax tools, but levers to drive national economic priorities, competitiveness and long-term resilience in a changing global environment.

At its core, the NIF aligns investment incentives with Malaysia’s key policy agendas, including the National Investment Aspirations (NIA), the New Industrial Master Plan 2030 (NIMP 2030) and emerging global tax standards such as the Global Minimum Tax (GMT). Incentives will be granted based on measurable contributions, such as value creation, quality jobs, technology transfer, supply-chain depth and sustainability rather than investment size alone. Companies will apply under a tiered, outcome-based structure through either a Special Tax Rate (STR) or an Investment Tax Allowance (ITA), in a Tier system with commitments assessed using the NIA Scorecard as the central evaluation mechanism.

The transition also comes with clear timelines. New manufacturing incentive applications under the Promotion of Investments Act 1986 will no longer be accepted after 28 February 2026, while existing approvals remain unchanged. For investors, this marks a shift from “eligibility-driven” applications to strategic positioning and evidence-based commitments. Malaysia is signaling clarity and discipline in its incentive policy, rewarding investments that align with where the economy is heading, not where it has been.

KPMG is working closely with MIDA and investors to interpret policy intent, translate business plans into outcome-aligned incentive strategies, and engage proactively with approving authorities. Our role spans upfront readiness assessments, NIA Scorecard positioning, incentive structuring under STR or ITA, and end-to-end application support. This ensures clients are not only compliant under the new framework, but competitively positioned to secure incentives that support both immediate investment objectives and long-term growth in Malaysia.

Note that the Guidelines and FAQs relating to the NIF may be updated periodically on MIDA’s or MITI’s official portals (can be accessed via the above links). Investors are encouraged to review these resources regularly to ensure they are referring to the most current requirements and procedural guidance.

KPMG will be organising a dedicated seminar to provide a deeper dive into the New Incentive Framework, explain its strategic implications, and showcase how KPMG’s specialised methodologies and insights uniquely position us to support investors in navigating the NIF with confidence. Please stay tuned for our e‑vite.

Poh Sin Yue
Partner
sypoh@kpmg.com.my
+603 7721 7285

Crystal Chuah Yoke Chin
Associate Director
ycchuah@kpmg.com.my
+603 7721 2714

Regina Lau
Partner
reglau@kpmg.com.my
+603 7721 2188

Titus Tseu
Executive Director 
titustseu@kpmg.com.my
+603 7721 2822

Ng Fie Lih
Partner 
flng@kpmg.com.my
+603 7721 2514