TAKO since 1979: Can SME/SMIs receive Tax Incentives for JinkoSolar Installation?

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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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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
to Know more about the incentive
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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​

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

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.
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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

  1. Green Investment Tax Allowance (GITA)
  2. Green Income Tax Exemption (GITE)
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Green Investment Tax Allowance

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.

How solar energy service providers can get Tax exemptions in Malaysia

Green Investment Tax Allowance (GITA)

- This incentive allows companies to claim a tax allowance equivalent to 100% of the qualifying capital expenditure (QCE) incurred on green assets, such as solar panels. - Up to 70% of this allowance can be offset against taxable income. - This incentive encourages investment in renewable energy infrastructure and helps offset initial costs.
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Green Income Tax Exemption (GITE)

- This incentive is available for companies providing qualifying green technology services, including solar energy services. - Eligible companies can enjoy a tax exemption of 70% of their statutory income for a period of three years. - This incentive specifically targets service providers and encourages the growth of the green technology sector.
More Info

Net Energy Metering (NEM) Program

- While not directly a tax exemption, the NEM program allows solar energy system owners to offset excess electricity generated against their consumption. - This can lead to significant savings on electricity bills, indirectly contributing to the profitability of solar energy service providers.
More info
solar panel double tax incentive malaysia
For inquiries regarding tax incentives applicable to solar panel companies such as JinkoSolar, FirstSolar or SolarTime, please contact us.
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