THE definitions of “Contract Research and Development Company” and “Research and Development Company” under Section 2 of the Promotion of Investments Act 1986 (PIA) have been amended to require approval as an R&D-status company by the international trade and industry minister effective January 1, the Malaysian Investment Development Authority (Mida) said.

In a statement today, Mida said this is following the passing of the Finance Bill 2021 in Parliament on December 23, which incorporated several announcements made in Budget 2022 and contained proposed amendments, including to the PIA.

“Companies in the business of providing R&D services, namely, contract R&D companies and R&D companies, that wish to apply for the R&D tax incentive will be granted R&D status (subject to ministry approval) for a period of five years,” it said.

It said the Finance Bill 2021 further provides that existing contract R&D companies and R&D companies that have been given approval as an R&D company prior to January 1 are required to notify Mida within the grace period from January 1 to June 30 for consideration.

“Companies approved with this status may apply for an extension with Mida. However, the granting of the approval is subject to consideration by the International Trade and Industry Ministry and Finance Ministry,” it said.

It said for this purpose, companies are required to provide documentation to prove that they are undertaking activities relating to R&D as defined under the PIA and comply with conditions imposed previously in their approval letters.

“Failure to do so will cause the companies to cease their status as approved companies fulfilling the definition of contract R&D company and R&D company,” it added. – Bernama, February 3, 2022.