A Quick Guide To Malaysia Digital (MD) Status Applications

Formerly known as MSC Malaysia, Malaysia Digital (MD) is a programme by the Malaysia Digital Economy Corporation (MDEC) that aims to improve the country’s digital economy through technology and infrastructure development in specific sectors.

Under this programme, qualified companies are awarded MD Status, granting them highly attractive tax incentives and expat talent privileges.

As this programme is already extensively covered, we’ve decided against a long guide, and have instead summarised MDEC’s multiple documents into a quick overview for new applicants, covering:

• sectors that qualify for MD Status
• eligibility criteria
• fees
• application steps, and
• an offer to let us handle it for you 🙂

Note: For those who want further reading, we’ve included our list of sources at the end, including a PDF of the MD Bill of Guarantees (BoGs)!

Let’s begin.

Sectors that qualify for MD Status

19 specific verticals qualify for MD Status, which MDEC calls ‘Malaysia Digital Activities’:

• artificial intelligence (AI)
• big data analytics (BDA)
• blockchain
• creative media technology
• sharing economy platform
• internet of things (IoT)
• data centre and cloud
• cybersecurity (technology / software / design and support)
• drone technology
• financial technology (fintech)
• 3D printing (technology / software / design and support)
• autonomous technologies
• integrated circuit (IC) design and embedded software
• robotics (technology / software / design)
• systems / network architecture design and support
• user interface and user experience (UI / UX)
• virtual, augmented and/or extended reality
• advanced telecommunication technology
• global business services or knowledge process outsourcing

Your business can involve the R&D, commercialisation, or provision of services in any of the above areas, and sectors not on this list can still be accepted if deemed significant by MDEC’s approval committee.

So if you’re working on a cool piece of technology, you should submit an application!

Eligibility criteria

We’re grouping these under two categories: Getting MD Status, and keeping MD Status.

Getting MD Status:

• proposing to or currently carrying out one or more of the MD activities listed above
• have a company incorporated under the Companies Act 2016

To keep MD Status, demonstrate that within 12 months of the award you have:

• begun operations and implement the MD Activities
• employed at least 2 full-time knowledge workers directly involved in the MD Activities with a minimum average monthly base salary of RM5,000
• incurred a minimum annual operating expense of RM50,000 for the MD Activities, and
• maintained a minimum paid-up capital of RM1,000

This is in addition to compliance with various local and federal government licensing requirements for your premise, industry, and business activity.

Fees

MDEC charges a non-refundable processing fee of RM1,080 for each MD Status application.

This doesn’t include third party service fees if you engage professional help–but we promise MISHU doesn’t charge that much!

Application steps

For those who want to handle the application process themselves, there are five main steps, assuming you already have your business plans figured out.

Step 1: Incorporate a company in Malaysia

As mentioned, MD Status is only granted to companies incorporated in Malaysia, so if you don’t yet have one, this should be your first step.

Those in Malaysia can incorporate themselves while those overseas will have to engage professional incorporation help–perhaps from MISHU 🤭

It takes seven to ten working days, and at the very least incurs a RM1,010 government fee.

Step 2: Register an MD account

Head over to the MD portal registration page and set up your account.

There’ll be the usual email verifications, which we’ll trust you to navigate yourself since this is an application for a digitally savvy business after all!

Step 3: Choose MD Status

You’ll have plenty of time to check out those other programmes later, so pick MD status and hit ‘proceed’.

Step 4: Enter SSM company registration number

See that text field at the bottom? You’ll need to key in a valid company number to proceed.

For example, MISHU’s is 202001002122, and when we try it out, we get the following prompt.

This is why you can’t skip incorporating a company!

Step 5: Fill and submit MD Status application form

You’ll get directed straight to the form, which you naturally have to fill in and submit, along with the processing fee and supporting documents.

From here, there are three stages to processing your application:

1. A business analyst will conduct a preliminary check purely based on your application.
2. The analyst will request additional information or for you to present your business.
3. Your application is submitted to the Malaysia Digital-Coordination Committee (MD-CC) for consideration and final approval.

If the MD-CC approves, your company will be issued an MD Status e-Certificate and you can now focus on making sure you comply with the other requirements within the next 12 months.

There’s a lot more to MD Status, but for a first time application, this is all you need to know.

Fast forward three years and you can look into MD Expansion to get some really attractive tax benefits.

MD Expansion Incentive

The MD Expansion Incentive issues tax reliefs to MD Status companies that have been operating for at least 36 months and have a paid-up capital of at least RM250,000.

There are additional requirements which can be read in full on MDEC’s guide.

Benefits

Companies applying for MD Expansion Incentive may choose one of two tax incentives:

• Reduced Tax Rate: 15% tax rate for five consecutive Years of Assessment (YA)
• Investment Tax Allowance: Deduct 30% or 60% of eligible capital spending from profits, reducing up to 100% of taxable income for five consecutive years

Fees and application steps

MDEC charges a non-refundable processing fee of RM2,160 for each MD Expansion application.

The submission is also done via the MD Status portal, and the steps are nearly identical.

Extra MD Status reading list

These sources were used to put this guide together:

• Malaysia Digital (MD) Status guidelines
• Malaysia Digital BOG explanatory notes
• MD Status portal user guide

And as promised, here’s a copy of the MD Bill of Guarantees.

We wish you a smooth application, and if you need help, MISHU is always here!

Let MISHU help with your MD Status application

From incorporating your company in Malaysia to guiding you through the entire MD Status application and then making the most of the incentives that come with it, our team will make sure everything is done right so you can focus on building your business.