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The Malaysian Inland Revenue Board (“MIRB”) has issued the Practice Note No. 2/2020 (“Practice Note”) relating to “Claiming of Capital Allowance on the Development Cost for Customised Computer Software” dated 16 March 2020 on 9 April 2020.  The Practice Note provides guidance on the application of the Income Tax (Capital Allowance) (Development Cost for Customised Software) Rules 2019 (“Rules”). The Rules allow for capital allowance to be fully claimed on the development cost for customised software over four years by a resident person in Malaysia based on an initial allowance of 20% and annual allowances of 20%, with effect from Year of Assessment 2018.

The Practice Note provides further clarifications on the types of expenses that qualify for capital allowance under the Rules and also sets out examples in which capital allowance may be claimed on the qualifying cost incurred.

For further details, please refer to our Tax Whiz and the MIRB’s Practice Note which can be accessed via the above links.

As a recap of the Rules, you may access our earlier Tax Whiz via the above link as well. 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

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