Please note that this article is not a definitive guide. Mystartr in not a tax firm and does not claim expertise in tax matters. Therefore we encourage you to consult your own tax agents or the Lembaga Hasil Dalam Negeri (LHDN).
In accordance with the Malaysian Government’s initiative to support the growth of startups and innovation, qualifying investors participating in ECF platforms are eligible for tax exemption. This incentive allows you, as an investor, to claim tax exemption on the total investment amount, subject to terms and conditions outlined by the LHDN in the Income Tax (Exemption) (No. 4) Order 2022 [P.U.(A) 142] For more information, please refer here (“Tax Exemption Order”).
What is the eligibility for the ECF tax exemption?
To qualify for the income tax exemption, the individual investor must comply with the conditions below:
- Resident in Malaysia.
- The investment must be made in an investee company between 1 January 2021 and 31 December 2023.
- The investment must be made in the form of holding shares which are paid in cash to the investee company through an equity crowdfunding platform (i.e. Mystartr) or through a nominee company incorporated under the Companies Act 2016, resident in Malaysia, and established by an equity crowdfunding operator in Malaysia.
- The investment must not be disposed of, either in full or in part, within two (2) years from the date the investment is made.
- The qualifying individual is granted an income tax exemption in respect of his/her aggregate income equivalent to 50% of the amount of their investment, up to a maximum of RM50,000 for each Year of Assessment (YA).
- This amount is limited to 10% of the aggregate income of the qualifying individual for the YA in the basis period during which the exemption is granted.
Kindly note that qualifying investors do not include corporate investors, as clarified in the Official FAQ.
For more information, please refer here.
Is individual investor invest through “Limited Liability Partnership nominee company” qualify to apply for the ECF tax exemption?
Previously, the entitlement was only valid for nominee companies (Sdn Bhd and Bhd).
However, with the latest update—Income Tax (Exemption) (No. 4) Order 2022 (Amendment) Order 2024, which came into effect on 1 January 2024, there is now further clarification:
- - The amendment introduces the concept of a “nominee limited liability partnership” (nominee LLP), which is a specific type of LLP registered in Malaysia, established by an equity crowdfunding operator to receive investments from qualifying individuals and invest on their behalf through an ECF platform.
- Under the revised exemption framework, tax exemptions now extend to investments made through nominee LLPs, provided that the individuals meet the necessary conditions as prescribed in the Tax Exemption Order.
- The qualifying investment period is confirmed to be from 1 January 2024 to 31 December 2026, and the investment must be made in the form of holding shares with payment through an ECF platform.
Certification for Tax Exemption
Mystartr will issue a certificate/letter to confirm your eligibility for the tax exemption. Investors can use this certification when applying for the ECF tax exemption.
