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Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to...

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Accounting

Racton Pte Ltd (Racton), is a foreign company incorporated in America. Racton is attracted to

the tax incentives offered by the Malaysian Government on manufacturing of promoted

products. As such, Racton is planning to set up a new company (Newco) in Malaysia in order

to apply for Pioneer Status or Investment Tax Allowance for its manufactured promoted

products. The choice is between setting up a branch or subsidiary for its Malaysian operation.

Initially, the plan is for Newco to have only RM2.4 million as paid up capital and as time goes

by, Newco will expand its operation if necessary. However, Newco is still undecided on the

timing of commencement of business in Malaysia. The choice is either 2019 or 2020. Newco

financial year end is 31st December. Estimated gross income is approximately RM 1 Million per

year.

After 5 years of operation, if everything goes according to plan, Newco plan to expand its

manufacturing business by incurring more capital expenditure i.e buying more machineries and

setting up new factory building. In this respect, Newco is unsure what kind of tax incentives

would be available for its expansion of manufacturing business after 5 years of operation.

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