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Malaysia: New incentive framework

The NIF will be implemented from Q1 2026 for the manufacturing sector and Q2 2026 for the services sector.

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January 30, 2026

The government announced a new incentive framework (NIF), which represents a shift in how Malaysia designs and administers investment incentives.

Announced under Budget 2026, the NIF will be implemented from Q1 2026 for the manufacturing sector and Q2 2026 for the services sector.

The NIF aligns investment incentives with Malaysia’s key policy agendas and emerging global tax standards such as the global minimum tax. 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).

New manufacturing incentive applications will no longer be accepted after February 28, 2026, while existing approvals remain unchanged. 

Read a January 2026 report prepared by the KPMG member firm in Malaysia

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