Kuala Lumpur:The Ministry of Finance (MoF) has put forward a proposal to revise the tax incentives for the Global Services Hub (GSH) in an effort to bolster Malaysia's competitiveness and draw in treasury management activities.

According to BERNAMA News Agency, these incentives are designed for companies that establish Malaysia as a base for high-value services, such as managing, controlling, and supporting key business functions. The proposed revisions detailed in the Budget 2027 tax measures document would apply to new companies that have not previously engaged in GSH or Principal Hub (PH) activities.

The revisions also include existing companies that have been previously approved for GSH or PH tax incentives and those seeking extensions to provide new additional services. The baseline income for these existing companies will be determined based on their average income over the last three years.

The tax rate proposed for GSH income is five percent for new companies. For existing companies, a rate of 15 percent would apply to income up to or equal to the baseline, while income exceeding the baseline would be taxed at five percent. These incentives would be provided for five-year periods, up to a maximum of 30 years, contingent on the company's performance and commitments throughout the preceding incentive period and its commitments for the following period.

Eligible services under the incentive program include regional business management or profit-and-loss management, strategic business planning, and corporate development. Companies are required to undertake at least two additional service activities, including strategic services, business services such as treasury fund management (TFM), or shared services.

Additional incentives are available for GSH companies engaging in TFM activities, such as withholding tax exemptions on interest paid to non-residents and a 100 percent stamp duty exemption on foreign currency-denominated loan agreements between companies.