s 29 Investment tax allowance
(1) Where a company which has been granted approval under section 27 has incurred in the basis period for a year of assessment in respect of the promoted activity or promoted product capital expenditure for the purposes of that promoted activity or promoted product, there shall be given to the company for that year of assessment an investment tax allowance of an amount approved by the Minister of Finance, such allowance not being more than one hundred per cent of that expenditure. (2) An allowance for expenditure given under subsection (1)— (a) subject to subsection (5), shall be given only for the year of assessment in the basis period for which that expenditure was incurred; (b) shall be given in respect of expenditure incurred within five years from the date from which the approval is to take effect; (c) subject to subsection (3), shall be given in respect of the manufacturing activity in an integrated agricultural activity for any expenditure incurred within another period of five years from a date to be determined by the Minister, being a date within or after the period mentioned in paragraph (2)(b); and (d) shall, in the case of a surrender of approval under subsection 27(4), be given in respect of expenditure incurred from the date from which the approval is to take effect up to the date of surrender: Provided that— (i) where a company incurs capital expenditure from the date from which the approval is to take effect referred to in paragraph (2)(b) in relation to a business which it is about to carry on in respect of a promoted activity or promoted product, that expenditure shall be deemed to be incurred in the basis period in which it commences to carry on the business; and (ii) where a company incurs capital expenditure prior to its application under section 27 and where the approval under section 27 is granted retrospectively from a date earlier than the date on which the application is made, the allowance under this section in respect of that expenditure shall be given, subject to subsection (5), only for the year of assessment in the basis period in which the company is notified of the approval of the application. (3) Where a company has been granted approval under section 27 in respect of an integrated agricultural activity, such company shall within six years from the date of such approval, provide the Minister with such particulars as may be prescribed for the purposes of determination of the date under paragraph (2)(c). (4) Where an allowance is given to a company under subsection (1) for a year of assessment, so much of the adjusted income of the company from the business of that company in respect of a promoted activity or a promoted product for the basis period for that year as is equal to the amount of the allowance (or to the aggregate amount of any such allowance, as the case may be shall be exempt from tax under the principal Act for that year of assessment. (5) Where, by reason of an insufficiency or absence of adjusted income of a company from a business of the company in respect of a promoted activity or a promoted product for the basis period for a year of assessment, effect cannot be given or cannot be given in full to any allowance to which the company is entitled under this section for that year in relation to the source consisting of that business, then, notwithstanding subsections (1), (2) and (4), so much of the allowance in question as cannot be given for that year shall be deemed to be an allowance to be given to the company under this section for the first subsequent year of assessment for the basis period for which there is adjusted income from that business, and so on for subsequent years of assessment until the company has received the whole of the allowance to which it is so entitled: Provided that the allowance arising under this subsection shall be given only after the abatement of adjusted income, if any, to which the company is entitled to under section 32, 33, 33A , 34 or 36. (6) Where any income is exempted from tax by virtue of subsection (4), section 23 shall apply to that income (with any necessary modifications) as it applies to income exempt under section 22. (7) For the purposes of this section, and subject to subsection (8), “capital expenditure”— (i) in relation to manufacturing, means capital expenditure incurred on a factory or on any plant and machinery used in Malaysia in connection with and for the purposes of the promoted activity or promoted product; (ii) in relation to agriculture, means capital expenditure incurred in respect of— (a) the clearing and preparation of land; (b) the planting of crops; (c) the provision of irrigation or drainage systems; (d) the provision of plant and machinery used in Malaysia for the purposes of crop cultivation, animal farming, aquaculture, inland or deep-sea fishing and other agricultural or pastoral pursuits; (e) the construction of access roads including bridges; and (f) the construction or purchase of buildings (including those provided for the welfare of persons or as living accommodation for persons) and structural improvements on land or other structures which are used for the purposes of crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits: Provided that for the purposes of subparagraphs (e) and (f) such roads, bridges, buildings, structural improvements on land and other structures are on land forming part of the land used for the purposes of such crop cultivation, animal farming, aquaculture, inland fishing and other agricultural or pastoral pursuits; (iii) in relation to hotel business, means capital expenditure incurred on the construction of an hotel building of the approved standard in Malaysia, including any alteration, extension and renovation or on the provision of plant and machinery or other facilities used in connection with the hotel business; (iv) in relation to a tourist project, means capital expenditure incurred in respect of a tourist project in Malaysia and includes capital expenditure on— (a) clearing of land for purposes of a tourist project; (b) planting of trees and plants; (c) construction of road and other infrastructure facilities provided they are on land forming part of the land used for the purposes of a tourist project; (d) the provision of birds, animals and other exhibits; (e) the provision of plant and machinery; (f) the provision of buildings (including those provided for the welfare of persons or as living accommodation for persons), structural improvements on land and other structures on land forming part of the land used for purposes of a tourist project. (8) For the purposes of this section, capital expenditure shall not include capital expenditure incurred on buildings used as living accommodation, plant and machinery where such buildings, plant or machinery are provided wholly or partly for the use of a director or an individual who is a member of the management, administrative or clerical staff. (9) This section shall apply to— (a) a company which has been granted approval under section 27 prior to the 1 November 1991; and (b) a company which has been granted approval under section 27 on or after 1 November 1991 but whose application under section 26 was received prior to 1 November 1991.