Malaysia Approves Venture Capital Tax Incentives to Boost Startup Investments

Malaysia's government has approved new venture capital tax incentives to strengthen the startup investment ecosystem, including a concessional 5% tax rate for up to 10 years for eligible funds investing at least 20% in local startups. Additionally, venture capital and private equity management companies registered with the Securities Commission will benefit from a reduced 10% tax rate, with the incentives also extended to onshore limited liability partnerships to broaden the investor base. Bank Negara Malaysia will streamline the Foreign Exchange Policy application process, allowing VC and PE firms to apply based on fund mandate size rather than per transaction, facilitating cross-border fundraising and investments. These reforms aim to boost Malaysia's regional competitiveness and position it as a global hub for venture and private capital. Khazanah Nasional and its subsidiary Jelawang Capital have selected five VC firms—Vynn Capital, Kairous Capital, First Move, AppWorks, and Granite Asia—under new fund manager programs to support local fund managers and scale startups regionally. The government's efforts reflect a commitment to creating a more investor-friendly environment and fostering a vibrant startup ecosystem.