Semiconductor trade group calls for big rise in tax breaks

The Malaysia Semiconductor Industry Association has urged the government to significantly increase tax breaks for the semiconductor sector in the upcoming federal 2027 budget. The industry body argues that such measures are crucial to attract further investment, technology, and talent in a highly competitive landscape. The proposed tax breaks include raising the expenditure limit for the automation capital allowance tenfold, as well as providing a 200% tax deduction for research and development expenditure.

Association president Wong Siew Hai emphasized the need for the government to adapt policies to the evolving requirements of the industry. The association's recommendations also focus on strengthening reinvestment incentives, enhancing support for automation and advanced manufacturing, and expanding the scope of eligible R&D activities under the 200% tax deduction.

They propose targeted R&D grants, shared research infrastructure, and stronger collaboration between industry and academia to bolster domestic capabilities. In 2025, the semiconductor subsector recorded RM16.9 billion in approved investments, underscoring Malaysia's significance in global semiconductor production networks.