Tun Razak Exchange Tax Incentives
Tun Razak Exchange (TRX) is a property development project built on 70-acre area in the heart of Kuala Lumpur by 1 Malaysia Development Berhad (1MDB) under the Economic Transformation Programme as an early entry point project to help Malaysia gaining a high-income economy in 2020 as well to create a vibrant financial district. Currently, Malaysia is one of the leading global Islamic financial centres supported by the Malaysian International Islamic Financial Centre (MIFC) initiative and thus, TRX could be seen as a regional hub providing Islamic financial services around the ASEAN Economic Community by the time it is completed.
The master plan for the exchange would focus on an integrated infrastructure development ensuring high quality of comfort and sustainability to its communities including comprehensive transportation links alongside international institutions and support services. In addition, the RM 26 billion projects would also attract both local and foreign talent needed in the development of TRX through incentives table at Malaysian Budget 2013 which will contribute in increasing the rapid growth of city’s liveability ranking among the Asia and perhaps the world.
Recently, government had granted many tax incentives including an industrial building allowance, tax exemption on 70% of the statutory income for a period of five years for property developers, stamp duty exemption on loan and service for TRX Status Company, and an Income tax exemption of 100% for a period of ten years. The Minister of Finance had also applies the Thin Capitalisation Rules that would take effect starting from January 2016 onwards.
As a matter of fact, these incentives which are also known as TRX Marquee status incentives are design to attract companies with financial services qualification to locate their activities in TRX which include Takaful operators, capital market services, insurance, Islamic banking and retail or merchant banking. However, these companies should apply for the licensed provided by the Bank Negara Malaysia or the Securities Commissions. The only similar place that can be compares with TRX that has received and granted such incentives in Malaysia is in Iskandar Malaysia, Johor Bahru.
To put it briefly, the tax incentives made by the Prime Minister got one sole purpose which is to serve as a relief for the costs of locating financial company in TRX. Nevertheless, the tax incentives have a limited life span which consider necessary to protect the country tax base and to restrict arbitrage. With the right plan had been employs comprising the right prospects, services regulatory frameworks and the relevant support gain from Government, all of these would likely contribute in building a great regional hub in Malaysia called TRX.