Guide to Filing the Equity Crowdfunding Tax Exemption for YA2023

Investing in the future of Malaysian entrepreneurship has become even more enticing. In the 2021 Budget, there was a proposal to incentivize individual investors to participate in Equity Crowdfunding by offering them income tax exemptions, subject to limits. This initiative is geared towards promoting investment in local startups and small businesses, all while offering investors appealing tax advantages.

Understanding the Equity Crowdfunding Tax Incentive

The Income Tax (Exemption) (No. 4) Order 2022 [P.U.(A) 142], gazetted on 28 April 2022, solidified the proposed tax incentives. Here's what it entails:

Income Tax Exemption: Qualifying individuals are eligible for an income tax exemption equivalent to 50% of their investment amount, capped at RM50,000 per Year Assessment (YA). It's important to note that this exemption is subject to a maximum limit of 10% of the individual's aggregate income for the YA. Additionally, to qualify for this exemption, investors must retain their investment for a minimum of two years and not have any familial relationship with the investee company.

Filing for Tax Exemption

You can access the BE 2023 Explanatory Notes by Lembaga Hasil Dalam Negeri (LHDN) at Nota Penerangan BE 2023; under B6. This document offers detailed insights into the process and requirements for claiming tax exemptions on Equity Crowdfunding investments.

When you are filing your taxes, fill in your tax exemption under the “Approved investment under angel Investor tax incentive” as per the screenshot below.?

Eligible investors who meet the criteria can expect to receive a Tax Exemption e-statement for their Equity Crowdfunding investment directly from the respective platform through which they made their investment.

If you encounter any challenges or need additional assistance while filing, don't hesitate to reach out directly to the Equity Crowdfunding platform where you made your investment. Alternatively, you can also contact LHDN for support at https://www.hasil.gov.my/hubungi-kami.

Investing in Equity Crowdfunding presents a remarkable opportunity for investors to not only support local businesses but also enjoy appealing tax benefits. By following the provided guidelines and seeking assistance when necessary, investors can ensure that their tax exemption filings for YA2023 are accurate and compliant.

Now that the pathway to tax exemption has been clarified, we trust that you'll find it easier to complete your tax filings for YA2023.