KUALA LUMPUR: The government is going to allow venture capital companies to have their investments tax exempted in their filings with Inland Revenue Board, as soon as three years into the investment.
When this incentive was announced under the Budget 2018, Minister of Energy, Science, Technology, Environment and Climate Change (MESTECC) Yeo Bee Yin explained venture capital companies were only eligible for the tax exemption of up to RM20 million, after they have exited from their investments.
This usually takes up to between eight and 10 years of investment before an investor is eligible for the maximum RM20 million tax exemption per year.
Under Budget 2018, the government had provided for companies or individuals investing in venture capital companies to be accorded a tax deduction in their investments of up to RM20 million per year.
The tax exemption is for money spent on management fees, performance fees and income from profit sharing received on investment made by venture capital companies.
Two months ago, however, the Ministry of Finance (MoF) approved of this tax incentives to be made available to companies and individuals as soon as three years into investments.
“So, my Ministry is in talks with MoF to have this 3-year investment period gazetted. After that, it's for the Securities Commission to implement, hopefully by the end of this year," she said.
“We want to incentivise more private financing into green projects,” Yeo said in supporting the Securities Commission, who implements this incentive to attract more private investments into the venture capital space.
She went on to reiterate her aspirations to have more venture capitalists and private equity investors putting their money renewable energy projects and energy efficiency initiatives.
The minister was speaking with reporters after officiating at the opening of the Southeast Asia Capital & Private Equity Conference 2019 here today, organised by the Malaysian Venture Capital & Private Equity Association.
Agencies that accord funds for business ventures that are now under the purview of MESTECC, are Malaysian Technology Development Corp, Malaysian Debt Ventures Bhd, Malaysia Venture Capital Management Bhd, Cradle Fund Sdn Bhd and Kumpulan Modal Perdana Sdn Bhd.
Yeo said these five agencies will soon be consolidated to raise their effectiveness, in spurring growth in the industry.