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Johor-Singapore Special Economic Zone (JS-SEZ) Tax Incentive Package

  • Writer: Aaron Tey
    Aaron Tey
  • Aug 9
  • 5 min read

The Johor-Singapore Special Economic Zone (JS-SEZ) marks a transformative chapter in cross-border economic collaboration between Malaysia and Singapore. Designed to enhance investment flows, stimulate innovation, and create a seamless business ecosystem, the JS-SEZ builds on the long-standing economic ties between the two nations.

With the official agreement signed and an incentive package unveiled by the Malaysian government on January 8, 2025, the JS-SEZ is poised to attract high-value investments across key sectors, including advanced manufacturing, global services, integrated tourism, and smart logistics. This initiative not only strengthens Johor’s position as a strategic investment destination but also reinforces the Malaysia-Singapore growth corridor as a global economic hub.

As businesses and investors explore the opportunities within this dynamic economic zone, the JS-SEZ stands as a testament to regional cooperation, paving the way for sustainable development and economic prosperity.EFFECTIVE DATE OF APPLICATION 01/01/2025 to 31/12/2034 

Manufacturing BusinessApplicable Industries

  1. Artificial Intelligence (AI) and Quantum Computing Supply Chain;

  2. Medical Devices;

  3. Pharmaceutical; or

  4. Aerospace Manufacturing and Maintenance, Repair, Overhaul (MRO) Services


Tax Incentive

Type of Company

Tax Incentive

Period

New Company

New investment in the manufacturing sector with capital investment (excluding land) above RM1 billion

Tax Rate of 5%

15 years

New investment in the manufacturing sector with capital investment (excluding land) between RM500 million to RM1 billion

Tax Rate of 5%

10 years

Existing Company

New investment in the manufacturing sector with capital investment (excluding land) above RM500 million for existing company in Malaysia relocating overseas facilities (for a new business segment not expansion of existing products) into Malaysia

Investment Tax Allowance of 100% on the qualifying capital investment (excluding land) incurred within 5 years, against 100% of statutory income

5 years


Area of Incentive

  1. Flagship F - Kulai - Sedenak (AI and Quantum Computing, Supply Chain, Medical Devices, and Pharmaceutical)

  2. Flagship E - Senai - Skudai (Aerospace Manufacturing and MRO Services)


Global Servies Hub



Applicable Industries

  1. Regional P&L;

  2. Strategic Business Planning;

  3. Corporate Development; and

  4. Regional or Global Treasury and Fund Management conducting cash pooling activities via onshore intermediaries


Tax Incentive

  • Special tax rate of 5% for a period up to 15 years

Eligible Criteria / Conditions

  1. Annual operating expenditure of at least RM50 million;

  2. Company must serve / business control of at least 10 Network Companies;

  3. Annual sales turnover of at least RM500 million and forex in-flow into the local banking system as proposed;

  4. A minimum of 50% of high-value positions (with a minimum monthly basic salary of RM10,000) shall be filled by full-time Malaysian employees as proposed.


Area of Incentive

  1. Flagship A - Johor Bahru Waterfront

  2. Flagship B - Iskandar Puteri


Integrated Tourism Project



Tax Incentive

  • Investment Tax Allowance (ITA) of 100% qualifying capital expenditure incurred within 5 years. The allowance can be offset against 70% of the statutory income for each year of assessment.

Eligible Criteria / Conditions

  1. Company which does not have an existing entity or related entity undertaking same hotel or tourism project in Malaysia;

  2. Paid-up capital of at least RM2.5 million;

  3. Investment in capital expenditure (excluding land) of at least RM500 million;

  4. Company undertaking integrated tourism project which consists of the followings:

    • Hotel with minimum number of rooms of 80 which consists of standard, superior, deluxe and suite; and

    • Minimum 1 tourist attractions (i.e. water park, outdoor park consists of rides and/or games, convention centre with capacity minimum of 3,000 participants, or outdoor sport excluding golf course and driving range).


Area of Incentive

  1. Flagship G - Desaru - Penawar


Smart Logistics Complex



Applicable Industries



Smart logistic operator who invests in development of smart logistics and carry out any of the eligible logistic activities:

  1. Regional Distribution Hub

  2. Integrated Logistic Services

  3. Dangerous Goods Storage

  4. Cold Chain Facilities


Tax Incentive

  • Investment Tax Allowance (ITA) of 100% qualifying capital expenditure incurred within 5 years. The allowance can be offset against 100% of the statutory income for each year of assessment.

Eligible Criteria / Conditions

  1. Investment in capital expenditure (excluding land) of at least RM500 million;

  2. The built-up area of the smart warehouse complex must be at least 50,000 m2 and equipped with at least 3 enabling elements technologies under the IR4.0;

  3. Use the application of modern construction techniques i.e. achieving a score for the Industrial Building System (IBS) that has been set by the Construction Industry Development Board (CIDB);

  4. Total full-time workforce must consist of at least 80% Malaysian citizens;

  5. A minimum of 30% of total high-value positions (with a minimum basic salary of RM10,000) shall be filled by full-time Malaysian employees.


Area of Incentive

  1. Flagship C - Tanjung Pelepas


Manufacturing - Downstream Specialty Chemicals



Tax Incentive

  1. Base chemical - methanol, ethylene, propylene, benzene, aromatics

  2. Organics intermediates - C1 to C6

  3. Specialty chemical

  4. Fertilizers

  5. Polymers / plastics

  6. Oleochemical / biochemical


Tax Incentive



Special Tax Rate for a company with capital investment (excluding land) of RM500 million and above in the manufacturing sector;

  1. Tier 1: 5% Special Tax Rate for up to 10 years (5 years + 5 years)

  2. Tier 2: 10% Special Tax Rate for up to 10 years (5 years + 5 years)

OR



Income Tax Exemption equivalent to Investment Tax Allowance (ITA) for a company with capital investment (excluding land) of RM500 million and above in the manufacturing sector;

  1. Tier 1: Income tax exemption equivalent to ITA of 100% on the qualifying capital investment (excluding land) for up to 10 years (5 years + 5 years). The allowance can be offset against up to 100% of statutory income for each assessment year.

  2. Tier 2: Income tax exemption equivalent to ITA of 60% on the qualifying capital investment (excluding land) for up to 10 years (5 years + 5 years). The allowance can be offset against up to 100% of statutory income for each assessment year.


Area of Incentive

  1. Flagship D - Tanjung Langsat - Kong-Kong


Additional Incentives



Tax Incentive

  1. 40% stamp duty exemption on the instrument of transfer / financing agreement for the purchase of a commercial property in Flagship A - Johor Bahru Waterfront and B - Iskandar Puteri that remains unsold as at 31/12/2024. The stamp duty exemption to be provided under Section 80(1) under the Stamp Duty Act 1949.


     

  2. A deduction equivalent to amount not exceeding RM1 million for each year of assessment in respect of cash contritbuion or contribution in-kind by qualifying person who sponsors a hallmark event.



    The hallmark event referred to is an event of regional or international significance which is carried on in Flagship G - Desaru – Penawar and supported / verified by MOTAC. For contribution made between 01/01/2025 to 31/12/2034.


     

  3. ACA in respect of renovation costs incurred on a building or part of a commercial building located in Flagship A - G for the purpose of qualifying company's business. Qualifying companies are companies that have been approved any tax incentives under PIA 1986 or ITA 1967 between 01/01/2025 - 31/12/2034 and operating in Flagship A - G. This incentive to be utilised only once throughout their business operation in JS-SEZ.



    To include expenses:

    • General electrical installation

    • Lighting

    • Gas system

    • Water system

    • Kitchen fittings

    • Sanitary fittings

    • Door, gate, window, grill and roller shutter

    • Fixed partitions

    • Flooring (including carpets)

    • Wall covering (including paint work)

    • Incentives and eligible criteria

    • False ceiling and cornices

    • Ornamental features or decorations excluding fine art

    • Canopy or awning

    • Recreation room for employee

    • Air-conditioning system

    • Day care centre for employee's children

    • Surau

    • Reception area

    • Green elements, smart solutions systems



      Initial allowance: 20% and annual allowance: 40%



Knowledge Worker Incentive



Tax Incentive



15% flat tax rate on chargeable employment income for a period of 10 years.



Eligible Criteria / Conditions

  1. Malaysian / non-Malaysian citizen;

  2. Not generating employment income in Malaysia 24-months prior;

  3. Salary abroad / in Malaysia > RM20,000 per month;

  4. Subject to academic qualifications / years of professional work experience;

  5. Subject to MyCOL profession and JS-SEZ qualifying sectors.


Area of Incentive

  1. All flagships


Please do not hesitate to contact us at jsten@jsc-corp.com for more information.

 
 
 

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