Hanoi:The Ministry of Finance has proposed changes to the tax incentives for the Global Services Hub (GSH) to enhance Malaysia's competitiveness and attract treasury management activities.

According to BERNAMA News Agency, the proposed revisions are intended to appeal to companies using Malaysia as a base for high-value services. These services include managing, controlling, and supporting key business functions.

The Ministry outlined in the Budget 2027 tax measures document that the revisions will apply to new companies that have not previously engaged in GSH or Principal Hub (PH) activities. Existing companies already approved for GSH or PH tax incentives, as well as those seeking to expand into new services, are also included in the proposed revisions.

For existing companies, the baseline income will be determined by their average income over the past three years. The proposed tax rate for GSH income is set at five percent for new companies. For existing companies, a rate of 15 percent will apply to income up to or equal to the baseline, while any income exceeding this baseline will be taxed at five percent.

The incentives would be granted in five-year periods, with a maximum duration of 30 years. This is contingent upon the company's performance and commitments during the prior incentive period and its commitments for future periods.

Eligible services under GSH include regional business management, profit-and-loss management, strategic business planning, and corporate development. Companies must also engage in at least two additional service activities, such as strategic services and business services like treasury fund management (TFM) or shared services.

Additional incentives are available for GSH companies involved in TFM activities, including exemptions from withholding tax on interest paid to non-residents and a full stamp duty exemption on foreign currency-denominated loan agreements between companies.