TAKO since 1979: Can SME/SMIs receive Tax Incentives for JinkoSolar Installation?
Who is JinkoSolar?
JinkoSolar is a solar module manufacturer. Its Malaysia factory is one of the largest solar corporate buyers of renewable energy in Southeast Asia. The factory is fully powered by renewables, with 100% of the electricity consumed in production and operation activities supplied by green electricity. JinkoSolar is also building a solar cell and module facility in Malaysia.
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2200 R&D Professionals
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More than 2800
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Company Culture of JinkoSolar
Mission: Optimizing the energy portfolio and take responsibility for enabling a sustainable future.
Vision : Provide a one-stop solution for clean energy and become an industry leader.
In Malaysia, JinkoSolar operates a manufacturing base in Perai, Penang. This factory is notable for being 100% powered by renewable energy, making it JinkoSolar’s first overseas “RE100 factory“. The factory produces solar cells and modules, contributing to the global supply of clean energy solutions.
Products of JinkoSolar
In Malaysia, JinkoSolar offers a variety of solar products, including:
Tiger Series Monocrystalline Solar Panels
High-efficiency panels suitable for residential and commercial use
Tiger Pro Series
Advanced solar panels with higher power output and efficiency
Tiger Neo Series
Latest technology N-Type monocrystalline solar panels, known for better reliability and lower degradation
Bifacial Solar Panels
Panels that can capture sunlight from both sides, increasing energy generation
Energy Storage Systems (ESS)
Solutions for storing solar energy, including home energy storage systems
Tax Incentive for Solar Panels Malaysia
A tax incentive for solar panels in Malaysia means that the government offers financial benefits to individuals or businesses who install solar energy systems. These incentives are designed to encourage the adoption of renewable energy and reduce reliance on fossil fuels.
- Government Incentive
- Green Investment Tax Allowance (GITA)
- Promoting Renewable Energy
- Economic Benefits
- Reduced Upfront Cost
Why Solar service providers are eligible for Tax Exemption?
Solar service providers in Malaysia are eligible for tax exemptions and incentives to encourage the adoption of renewable energy. These incentives are designed to promote sustainable energy practices and reduce reliance on fossil fuels.
Primary Reasons Why Solar Service Providers are Eligible for Tax Exemptions
Government's Commitment to Renewable Energy
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- The Malaysian government has set ambitious targets for renewable energy adoption.
- Tax incentives are a powerful tool to incentivize businesses and individuals to invest in solar energy solutions.
Environmental Benefits
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- Solar energy is a clean and renewable source of energy, reducing greenhouse gas emissions and mitigating climate change.
- By promoting solar energy, the government aims to improve air quality and protect the environment.
Economic Benefits
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- The solar energy industry can create jobs and stimulate economic growth.
- Tax incentives can encourage investment in the solar sector, leading to technological advancements and cost reductions.
Specific Tax Incentives for Solar Service Providers
- Green Investment Tax Allowance (GITA)
- Green Income Tax Exemption (GITE)
Solar Tax Incentive Malaysia
Malaysia offers attractive tax incentives to encourage the adoption of solar energy. These incentives are primarily targeted at businesses and aim to make solar power more financially viable. Here are the key incentives:
1. Capital Allowance (CA)
- What it is: Allows businesses to claim a tax allowance of 100% of the total solar project cost.
- How it works: The allowance is spread over six years:
- 20% in the first year
- 14% annually in the following five years
- Benefit: Reduces taxable income, leading to lower tax payments.
2. Green Investment Tax Allowance (GITA)
- What it is: Provides a tax allowance of 100% of the qualifying capital expenditure on green assets, including solar panels.
- How it works:
- Can be offset against up to 70% of the company’s taxable income in the initial year.
- Any remaining balance can be carried forward for a maximum of three years.
- Benefit: Significant tax reduction in the initial years of the project.
Combined Benefit
Eligible companies can benefit from both CA and GITA, potentially reducing their tax burden by up to 48% of the total solar project cost.
Eligibility
- Currently, these incentives are primarily available to Malaysian businesses (Sdn. Bhd. or Berhad).
- Residential homeowners generally do not qualify for these specific tax incentives.
Example Calculation
- Company: GreenTech Solutions Sdn. Bhd.
- Project: Installation of a 100kWp solar PV system
- Total Project Cost: RM 500,000
Tax Savings:
- Year 1: RM 600,000 (CA + GITA)
- Years 2-6: RM 70,000 per year (CA)
Total Tax Savings over 6 years: RM 950,000
Solar Panel Double Tax Incentive Malaysia
Dual Incentives
- Unlike many countries that offer a single tax break, Malaysia provides two distinct incentives:
- Capital Allowance (CA): Allows businesses to deduct a portion of the solar system’s cost from their taxable income over six years.
- Green Investment Tax Allowance (GITA): Provides a significant tax deduction in the initial year, accelerating the return on investment.
Accelerated Tax Benefits
GITA allows companies to offset a substantial portion of the solar investment against their current year’s taxable income. This immediate tax relief significantly boosts the project’s financial attractiveness.
Combined Impact
The combined effect of CA and GITA can result in substantial tax savings, potentially reaching up to 48% of the total solar project cost. This level of tax support is uncommon and makes solar energy highly competitive with traditional grid electricity.
MS IEC 62305 Compliant Protection
TAKO has over 23 years of experience in providing Malaysia Standard Lightning Protection System in Malaysia. Its services also includes Solar Lightning Protection System.
MS IEC 62305-2 Compliant Risk Assessment software
TAKO has developed a Risk Assessment Software which is the 1st and only tool tailored for Malaysia Weather.