Kuala lumpur: The Ministry of Finance (MoF) has announced a proposal to revise tax incentives for venture capital companies (VCCs), venture capital management companies (VCMCs), and individual shareholders of VCCs. The aim is to further encourage investment activities by VCCs.

According to BERNAMA News Agency, the MoF outlined in an appendix issued alongside the Budget 2026 presentation that a proposed corporate tax rate of five percent will apply to all VCC income, excluding interest or profit income derived from savings, fixed deposits, or deposits. The proposal mandates that VCCs invest a minimum of 20 percent of their funds in local venture companies to qualify for these incentives.

The ministry specified that the tax incentive will be applicable for a period of 10 years or for the remaining life of the fund, beginning from the year the VCC obtains its first certification from the Securities Commission Malaysia (SC). It is essential that the first certification is secured by December 31, 2035.

Furthermore, the MoF stated that the tax incentive will also be extended to entities incorporated under the Limited Liability Partnerships Act 2012 and the Labuan Limited Partnerships and Limited Liability Partnerships Act 2010, provided they choose to be taxed under the Income Tax Act 1967.

Regarding VCMCs, the MoF proposed a tax rate of 10 percent on income derived from the share of profits, management fees, and performance fees, applicable from the year of assessment 2025 to 2035. For individual shareholders of VCCs, an exemption from income tax on dividends paid, credited, or distributed to individual shareholders at the first level is proposed for the same assessment period from 2025 to 2035.