Malaysia’s GITA and GITE incentives are the two most significant tax mechanisms for commercial solar investments. GITA gives companies installing solar for their own use a 100% investment tax allowance over 3 years — effectively allowing the full cost of a solar system to be deducted against taxable income. GITE gives companies earning solar energy service income a 70% income tax exemption for 10 years. These are substantial incentives, but they require MIDA approval before claiming, and many Malaysian companies miss them simply because they are unaware of the application process.
MIDA Approval Required Before Claiming — Not Optional Documentation
Companies cannot self-certify GITA or GITE eligibility. MIDA must approve the application before the incentive can be claimed in tax filings. Companies that install solar without MIDA approval and attempt to claim the allowance risk LHDN disallowing the deduction during tax audit. Apply to MIDA during the project — do not wait until the system is commissioned and the first tax return is due.
GITA: Green Investment Tax Allowance
Mechanism
GITA is an Investment Tax Allowance — a deduction applied to capital expenditure on green technology assets. Unlike standard capital allowances (which depreciate an asset over several years at a fraction of its cost), GITA provides a 100% ITA — meaning the full capital cost of the solar system qualifies as a deduction against statutory income.
The ITA is offset against 70% of statutory income per year until the full allowance is absorbed. Any unabsorbed allowance carries forward indefinitely until fully used.
Mathematical illustration:
Solar system installed: RM 1,800,000
GITA allowance (100%): RM 1,800,000
Company statutory income: RM 2,000,000 / year
Year 1: GITA deduction = 70% × RM 2,000,000 = RM 1,400,000
Taxable income = RM 2,000,000 − RM 1,400,000 = RM 600,000
Remaining GITA = RM 1,800,000 − RM 1,400,000 = RM 400,000
Year 2: GITA deduction = RM 400,000 (balance)
Taxable income = RM 2,000,000 − RM 400,000 = RM 1,600,000
GITA fully absorbed
Total tax saved (at 24% corporate tax rate): ~RM 432,000This represents a direct cash equivalent saving of approximately 24% of the total solar investment for companies paying the standard 24% corporate tax rate.
Eligibility Criteria
| Criterion | Requirement |
|---|---|
| Company type | Malaysian-incorporated, tax-resident company |
| Solar system use | For own consumption (not for sale to third parties as primary business) |
| System location | Installed at the company’s own premises |
| Application | MIDA approval received before tax claim |
| Connection type | NEM, SELCO, or off-grid (all eligible) |
Qualifying Capital Expenditure
GITA covers the capital cost of the solar PV system, including:
- Solar panels
- Inverters
- Mounting and racking systems
- DC and AC cabling
- Protection devices and switchgear
- Monitoring systems
- PE fees and installation costs (confirm current MIDA treatment)
It does not cover ongoing operating costs — maintenance contracts, insurance, and monitoring subscriptions are not ITA-eligible (they may be deductible as operating expenses under normal tax rules).
GITE: Green Income Tax Exemption
Mechanism
GITE provides a 70% exemption on statutory income derived from qualifying green technology services for 10 years. Only 30% of the eligible income is taxable at the standard corporate rate.
Who qualifies:
- Solar installation companies (income from solar installation services)
- Solar energy developers (income from selling solar energy under PPAs)
- Green technology service providers (consulting, design, engineering for solar projects)
- Companies providing rooftop solar energy to tenants under energy service agreements
Illustration:
Company: Solar installer
Annual revenue from solar installation: RM 5,000,000
Statutory income (after expenses): RM 800,000
GITE exemption (70%): RM 560,000
Taxable income: RM 240,000
Tax payable (at 24%): RM 57,600
Without GITE, tax payable: RM 192,000
Annual tax saving: RM 134,400
Over 10 years: RM 1,344,000 (at flat income — actual benefit depends on income growth)GITA vs GITE: Which Applies?
| Scenario | Incentive |
|---|---|
| Factory installs solar on own roof to reduce electricity bill | GITA |
| Solar installer earns income from installing systems for clients | GITE |
| Hotel installs solar to self-consume and reduce utility costs | GITA |
| Solar developer owns rooftop solar and sells electricity to building tenant | GITE |
| Renewable energy company with income from solar energy services | GITE |
| Manufacturing company installs solar and also provides energy auditing services | Both (GITA for own-use assets; GITE for service income) |
Green Technology Financing Scheme (GTFS)
In addition to GITA and GITE, the Green Technology Financing Scheme (GTFS) provides subsidised financing for green technology projects including solar. Under GTFS:
- Companies can access loans from participating Malaysian banks for solar projects
- The government provides an interest subsidy (historically 2% per annum — confirm current rate with Bank Negara Malaysia or the Green Technology and Climate Change Council)
- A government guarantee is provided on a portion of the loan value, reducing the bank’s credit risk and improving loan approval prospects
- GTFS targets projects from SMEs and non-SMEs investing in green technology
The GTFS has run in multiple phases. Confirm the current GTFS terms, participating banks, and available budget from the Green Technology and Climate Change Council (MGTC) at mgtc.gov.my.
Import Duty and Sales Tax Exemptions
Solar PV panels and inverters imported into Malaysia may qualify for:
Import Duty Exemption
Under the Customs Duties (Exemption) Order, equipment classified under specific HS codes for solar energy systems is eligible for import duty exemption. Key HS codes relevant to solar:
- Solar cells and modules: Chapter 85 (confirm specific subheadings with RMCD)
- Inverters: Chapter 85 (confirm specific subheadings)
- Mounting systems: Chapter 73 or 76 (aluminium or steel)
Process: Apply for import duty exemption via the Royal Malaysian Customs Department (RMCD) at the time of import. Submit a Customs Exemption application with a description of the goods, HS codes, intended use (solar project), and supporting project documentation.
Sales Tax Exemption
Under the Sales Tax (Goods Exempted from Sales Tax) Order, goods used in qualifying green technology projects may be exempt from Malaysia’s 10% Sales Tax. Confirm the current schedule with RMCD — budget announcements can add or remove specific goods from the exemption list.
Model Full Solar ROI Including GITA Tax Savings
SurgePV’s financial tool calculates Malaysian solar payback periods and IRR incorporating GITA allowance absorption — giving C-suite decision-makers a complete picture of the after-tax investment return.
See the Financial ToolNo commitment required · 20 minutes · Live project walkthrough
Financial Impact: GITA vs No Incentive
For a typical Malaysian C&I solar installation:
| Parameter | Example Values |
|---|---|
| System size | 200 kWp |
| Installed capital cost | RM 800,000 |
| Corporate tax rate | 24% |
| GITA allowance | RM 800,000 (100% of capex) |
| Tax saving from GITA | RM 192,000 (24% × RM 800,000) |
| Simple payback (without GITA) | ~7–9 years |
| Simple payback (with GITA) | ~5.5–7 years |
| IRR improvement from GITA | +3–5 percentage points (depending on income profile) |
The actual improvement depends on the company’s tax position — a company that is not currently profitable or that has existing tax losses will absorb GITA more slowly and the timing benefit is less immediate.
Related Malaysia Compliance Guides
- Malaysia Solar Regulations Overview — full country compliance stack
- Malaysia NEM 3.0 Guide — how the NEM billing scheme works
- C&I Solar Malaysia — NEM vs SELCO vs LSS for commercial buyers
- SEDA Application Process — NEM quota application
Use solar design software that integrates Malaysian tariff data and can produce financial models suitable for MIDA incentive applications — complete with energy yield, tariff savings, and capital cost breakdowns.
Frequently Asked Questions
Can an SME with Sdn Bhd status claim GITA? Yes. GITA is available to all Malaysian tax-resident companies including Sdn Bhd, regardless of size. The SME capital allowance rules (accelerated capital allowance for small companies) apply separately — GITA stacks on top of normal capital allowance treatment as an additional ITA. Confirm with your tax agent whether claiming GITA is more beneficial than accelerated capital allowance for the specific company’s tax position.
Does GITA apply if the solar system is financed by a bank loan? Yes. GITA applies to the qualifying capital expenditure incurred — regardless of whether the purchase was funded by equity or debt. If the company takes a bank loan to finance the solar system, the full purchase cost (including the financed amount) qualifies for GITA, subject to the 70% statutory income offset limit per year.
Can a company claim GITA on a solar system installed under a lease or PPA? A company that leases a solar system from a solar developer (under a solar lease or PPA) does not own the asset — the developer does. In a lease/PPA structure, the solar developer (asset owner) would claim GITA, not the off-taker (the company using the electricity). The off-taker benefits through a reduced electricity cost (lower than the TNB tariff) rather than through a tax incentive directly. The solar developer may also qualify for GITE on their service income.
What is the deadline for MIDA GITA applications? There is no absolute deadline for GITA applications in the sense of a sunset date — the incentive has been available across multiple budget cycles. However, the government can modify or withdraw the incentive in any budget announcement. Apply as early as possible during the project. MIDA’s recommendation is to apply before project commencement or during execution — applications submitted after the system is already in service and tax returns have been filed may face additional scrutiny.
