COMMERCIAL & INDUSTRIAL INCENTIVES

SELCO

Under the SELCO, the solar energy you generate is consumed directly within your home or business. To fully maximize this setup, a battery storage system is essential — it stores excess solar energy produced during the day for use at night or during peak times. Every kilowatt-hour (kWh) used from your solar and battery setup reduces your reliance on the grid, helping you lower electricity bills and improve energy independence.

Double Tax Allowance

Businesses can claim up to 100% tax deduction on qualifying solar investments through Capital Allowance and the Green Investment Tax Allowance (GITA). These incentives help reduce taxable income while supporting your move to clean energy.

Community Renewable Energy Aggregation Mechanism (CREAM)

As a roof-top owner, you can become a Local Energy Generator and Aggregator (LEGA) under the CREAM mechanism. This allows you to install a rooftop solar PV system (LCSP) with a capacity between 100 kWp and 2 MWp per 11kV feeder on residential properties (landed homes only), and supply green electricity to low and medium voltage consumers within approximately a 5 km radius, using the existing distribution system — turning unused space into a long-term income stream

GREEN INCENTIVES TAX ALLOWANCE (GITA)

Explained

What is GITA?

The Green Investment Tax Allowance (GITA) is a government-backed initiative designed to encourage Malaysian businesses to invest in certified green technologies—including solar photovoltaic (PV) systems.

This tax allowance helps reduce your company’s taxable income by allowing you to claim up to 60% of your qualifying solar investment as a tax deduction.

Key Benefits

  • 60% Tax Allowance on qualifying capital expenditure

  • Applicable for approved green technology assets (including solar PV)

  • Can offset up to 70% of statutory income per year

  • Unused allowances can be carried forward to future years until fully claimed

Example

Assume your company has an investment of RM 200,000 in a certified solar PV system, and has RM 500,000 in taxable income: 

Total income tax payable without GITA = 24% × RM 500,00 = RM 120,000

Total income tax payable with GITA = 24% × (RM 500,000 - RM 120,000) = RM 91,200

Total Savings = RM 120,000 - RM 91,200 = RM 28,800 (24% of 60% of RM 200,000)

This RM 28,800 offsets up to 70% of your statutory income with this allowance annually

Any unused amount is carried forward to future years until fully utilized

CAPITAL ALLOWANCE (CA)

Explained

What is CA?

Capital Allowance (CA) is a tax incentive provided by the Malaysian government that allows business owners to deduct the cost of solar installation from their taxable income. It’s designed to encourage companies to invest in sustainable energy while easing their financial burden.

If your business is a Sdn Bhd or Bhd entity and you're investing in a solar PV system for your own use, you can enjoy substantial tax savings over time through this scheme.

Example

Under Schedule 3 of the Income Tax Act 1967, your solar system is treated as a qualifying asset under the category of "plant and machinery."

This means your business can claim:

  • Initial Allowance (IA): 20% in the first year

  • Annual Allowance (AA): 14% each year thereafter

  • Until the full investment amount is deducted

Key Benefits

Assume your company has an investment of RM 200,000 in a certified solar PV system.

Your company will save additional 24% × RM 200,000 = RM 48,000

Year 1: You can deduct RM 16,320 from your taxable income (20% Initial Allowance + 14% Annual Allowance)

Year 2 onwards: Deduct RM6,720/year

Until the total RM100,000 is fully deducted over several years

These deductions help to reduce your business’s tax bill, improving your return on investment.

Ready To Power Your Business?

Discover how solar can drive long-term savings and strengthen your brand’s sustainability efforts.