Benefits of Residential Solar
Reduce electricity bills
Hedge against rising electricity tariff
Increase property value
Utilise existing roof space
Protect the environment
Modern exterior view
Smart Energy Management
Benefits of Commercials & Industrial Solar
Investment Tax Allowance (ITA) from MIDA
Reduce electricity bills
Avoid maximum demand penalty
Enjoy double tax deduction
Contribute to Green Building Index (GBI)
Lower financing cost under the Green Technology Financing Scheme (GTFS)
Maximum Demand Charges
The electric utilities must maintain sufficient generating capacity and transmission capacity to supply a customer’s peak demand at any given time. Most of the time the utility’s generating and transmission capacity sits by idly waiting to spring into action whenever customers demand it. It is expensive to maintain that excess generation and transmission capacity. Utilities charge customers for the costs of having power ready on demand at any time through the demand charge.
Solar power systems can counteract high demand charges in the following way:
Solar power systems only generate energy when the sun is out, but if a business’ main demand occurs during the daytime hours that a solar system is producing, the business may be able to draw most or all of its electricity needs from solar.
If a business is able to draw most or all of its energy needs from solar, it may help reduce the rate of demand at which the business draws electricity from the grid.
Solar produces at times of peak demand when demand charges are most often at their highest rates. If demand can be reduced during those hours consistently, month after month avoiding a spike in demand, overall demand charges may be reduced.
Solar may allow business to switch to different rate schedules with higher energy usage costs, but lower demand charges. This may be advantageous since solar can be offsetting the higher energy usage costs and any spikes in demand will be less costly if the demand charge rate can be lowered.
Malaysia offers a wide range of tax incentives ranging from tax exemptions allowances based on capital expenditure to enhanced tax deductions.
Where income is exempted, tax exempt dividends may be paid out of the exempted income. For incentives by way of allowances, any non-utilized allowances can generally be carried forward until fully utilized.
These incentives are generally available for tax resident companies.
Investment Tax Allowance (ITA)
Investment Tax Allowance (ITA) of 100% of qualifying capital expenditure incurred on a green technology project from the year of assessment 2013 (date on which the first qualifying capital expenditure incurred is not earlier than 25 October 2013) until the year of assessment 2023. The allowance can be offset against 70% of statutory income in the year of assessment. Non-utilized allowances can be carried forward until they are fully absorbed.
Green technology project related to renewable energy, energy efficiency, green building, green data center, and waste management can qualify for this tax incentive. Please refer to the Guideline for Application for Incentives and/or Expatriate Posts for Green Technology (GT) or visit to www.mida.gov.my for more information.
Applications received by 31 December 2020 are eligible for this incentive.
Capital Allowance (CA)
Capital allowances are deductions claimable for the wear and tear of qualifying fixed assets such as industrial machinery, office equipment and sign boards. Under Capital Allowance, Solar PV system could categorized as Plant & Machinery and is eligible for depreciation over the period of 6 years.
It comprises the following types of provisions:
Initial Allowance 20% (IA – for the first year allowance)
Annual allowance 14% (AA – for subsequent years until the full amount is availed)
Balancing allowance; and