TAKO since 1979: Can Malaysia SMI/SME receive Tax Incentives for FirstSolar Panels Installation?

FirstSolar is a leading American solar technology company founded in 1999. They specialize in manufacturing solar panels and providing utility-scale photovoltaic (PV) power plants. It operates a manufacturing facility in Kulim, Kedah, Malaysia.

About FirstSolar

FirstSolar operates a manufacturing facility in Kulim, Kedah, Malaysia. This facility focuses on producing high-efficiency photovoltaic (PV) solar panels using Cadmium Telluride (CdTe) thin-film technology. The plant contributes significantly to First Solar’s global production capacity, supporting their commitment to providing sustainable and renewable energy solutions worldwide.

Their operations in Malaysia play a crucial role in their overall mission by producing advanced solar panels that help reduce carbon emissions and promote clean energy.

GigaWatts of Solar Capacity

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offset CO2 emissions

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Solar Modules Produced

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FirstSolar Vision & Mission

Vision: First Solar’s vision is to lead the world’s sustainable energy future. They aim to provide eco-efficient solar solutions that generate clean, affordable electricity while minimizing environmental impact.

Mission: Their mission is to create enduring value by enabling a world powered by clean and affordable solar energy. This mission underscores their commitment to sustainability, innovation, and operational excellence.

Products of FirstSolar

FirstSolar has installed over 30 gigawatts (GW) of solar capacity worldwide. First Solar’s CdTe technology has achieved a module efficiency of 22.1%, one of the highest for thin-film solar panels.

Series 7 Module

High-efficiency, thin-film photovoltaic (PV) modules using Cadmium Telluride (CdTe) technology, designed for utility-scale solar projects.

Series 6 Module

Advanced PV modules with improved performance and efficiency, suitable for both utility-scale and commercial applications.

Ecosystem Solutions

Comprehensive solutions that include project development, financing, and operations and maintenance services to support the entire lifecycle of solar projects.

Introducing

GREEN INVESTMENT TAX ALLOWANCE

The Green Investment Tax Allowance (GITA) is a tax incentive introduced by the Malaysian government to promote the adoption of green technology and support the country’s transition to a sustainable, low-carbon economy.

Key Points of GITA

INTRODUCING

Tax Incentives for SME / SMI

Tax Rebate for SME / SMI exists in Malaysia. This small and medium ventures can be eligible for tax incentives for Solar Panel Installation.

Defining SME / SMI in Malaysia

In Malaysia, the definitions for Small and Medium Enterprises (SMEs) and Small and Medium Industries (SMIs) are quite specific and are determined by criteria such as sales turnover and the number of full-time employees.

SME Definition

Manufacturing Sector: Firms with sales turnover not exceeding RM50 million OR number of full-time employees not exceeding 200.
Services and Other Sectors: Firms with sales turnover not exceeding RM20 million OR number of full-time employees not exceeding 75.

SMI Definition

Manufacturing, Manufacturing-Related Services, and Agro-based Industries: Enterprises with full-time employees not exceeding 150 OR annual sales turnover not exceeding RM25 million.

Services, Primary Agriculture, and ICT Sectors: Enterprises with full-time employees not exceeding 50 OR annual sales turnover not exceeding RM5 million.

Importance of Embracing Solar Energy for SME / SMI

Embracing solar energy can be highly beneficial for Small and Medium Enterprises (SMEs) and Small and Medium Industries (SMIs) in Malaysia. Here are some key points:

Cost Savings

Lower electricity bills by generating your own power.

Environmental Impact

Reduce carbon emissions and promote sustainability.

Energy Independence

Less reliance on the grid, leading to more stable energy costs.

Reputation Boost

Enhance your business's image by being eco-friendly.

Government Incentives

Access tax benefits and rebates to offset initial costs.

How FirstSolar Solar Energy Can Help SME / SMI Receive Tax Incentives

CASE STUDY

Embracing Solar Energy and GITA for SMEs in Malaysia

In recent years, Malaysia has been increasingly committed to sustainable development and renewable energy. One of the key initiatives supporting this transition is the Green Investment Tax Allowance (GITA). This case study explores how a small manufacturing enterprise, TAKO Lightning System, leveraged GITA to install FirstSolar panels, resulting in significant cost savings and environmental benefits.

Company Overview

TAKO Lightning System

Industry: Manufacturing
Location: Shah Alam, Selangor, Malaysia
Size: SME with 50 employees
Products: Electrostatic Discharge (ESD) and Lightning Protection Solutions

Challenges

TAKO Lightning System faced several challenges before adopting solar energy:

High Energy Costs: Electricity bills were a major operating expense.
Sustainability Goals: The company aimed to reduce its carbon footprint and contribute to environmental sustainability.
Energy Dependence: Frequent energy price fluctuations impacted budgeting and financial planning.

Solution

To address these challenges, TAKO Lightning System decided to invest in solar energy by installing FirstSolar panels and taking advantage of the Green Investment Tax Allowance (GITA).

Implementation Steps

Assessment: Conducted an energy audit to determine the feasibility of solar energy and the required capacity.
Selection: Chose FirstSolar panels for their high efficiency and reliability.
Application for GITA: Applied for the Green Investment Tax Allowance through the Malaysian Green Technology and Climate Change Corporation (MGTC).
Installation: Partnered with a local solar installation company to set up the solar panels.
Verification: Ensured the system was properly installed and complied with all regulatory requirements.
Monitoring: Implemented a monitoring system to track energy production and savings.

Outcomes and Benefits

Cost Savings: Reduced electricity bills by 40%, saving RM 120,000 annually.
Tax Incentives: Received GITA, resulting in significant tax savings that offset the initial investment cost.
Environmental Impact: Reduced carbon emissions by 150 tons annually, contributing to the company’s sustainability goals.
Energy Independence: Achieved greater stability in energy costs, improving financial planning and budgeting.
Reputation and Brand Image: Enhanced the company’s reputation as an environmentally responsible business, attracting new customers and partners.

TAKO Lightning System’s successful implementation of solar energy through the installation of FirstSolar panels and leveraging GITA illustrates the potential benefits for SMEs and SMIs in Malaysia. By embracing renewable energy, businesses can achieve significant cost savings, reduce their environmental impact, and improve their brand image, all while taking advantage of government incentives.

Recommendations on Tax Incentives for Solar

For other SMEs and SMIs considering solar energy, the following steps are recommended:

Conduct an Energy Audit: Assess your current energy usage and potential savings.
Choose Reliable Partners: Select reputable solar technology providers and installers.
Leverage Government Incentives: Apply for tax incentives like GITA to make the investment more affordable.
Monitor and Maintain: Implement systems to monitor performance and ensure ongoing maintenance.

Embracing solar energy is a smart financial and environmental decision for SMEs and SMIs in Malaysia, supported by government incentives to make the transition more accessible and beneficial.

Solar Panel Double Tax Incentive Malaysia

Businesses in Malaysia can enjoy a “double tax incentive” when they invest in solar panel installations. This means they can benefit from two separate tax incentives:

Capital Allowance (CA): Allows businesses to claim a tax allowance of 100% of the total solar project cost. This allowance is spread over six years, with 20% claimed in the first year and 14% annually thereafter.
Green Investment Tax Allowance (GITA): Provides a tax allowance of 100% of the qualifying capital expenditure on green assets, including solar panels. This allowance can be offset against up to 70% of the company’s taxable income in the initial year, with any remaining balance carried forward for a maximum of three years.

Short Case Study: Solar Panel Installation in Malaysia

Company: GreenTech Solutions Sdn. Bhd.
Project: Installation of a 100kWp solar PV system
Total Project Cost: RM 500,000

Tax Incentives Calculation:

1. Capital Allowance (CA):

Year 1: 20% of RM 500,000 = RM 100,000
Years 2-6: 14% of RM 500,000 = RM 70,000 per year

2. Green Investment Tax Allowance (GITA):

Year 1: 70% of taxable income (assuming RM 1,000,000) = RM 700,000
Remaining Balance: RM 500,000 – RM 700,000 = RM -200,000 (carried forward for 3 years)

Combined Tax Savings:

Year 1: RM 100,000 (CA) + RM 500,000 (GITA) = RM 600,000
Years 2-6: RM 70,000 (CA) + RM 0 (GITA) = RM 70,000 per year

Total Tax Savings over 6 years: RM 600,000 + (RM 70,000 * 5) = RM 950,000

FirstSolar's Role in Receiving Tax Incentives for SMI/SME by Solar Panels Installation

FirstSolar plays a significant role in helping Small and Medium Enterprises (SMEs) and Small and Medium Industries (SMIs) in Malaysia receive tax incentives for installing solar panels. Here’s how:

High-Efficiency Products

FirstSolar offers high-efficiency photovoltaic (PV) modules using Cadmium Telluride (CdTe) thin-film technology. These panels are designed to maximize energy output, making them an attractive and reliable option for businesses looking to switch to solar energy. The high efficiency of these panels ensures that businesses get the most out of their investment.

Eligibility for Government Incentives

By using FirstSolar panels, businesses can take advantage of various government incentives. These include:

Green Investment Tax Allowance (GITA): Provides a tax allowance of up to 100% of the qualifying capital expenditure on approved green technology assets.
Green Income Tax Exemption (GITE): Offers tax exemptions for solar leasing projects, further reducing the financial burden of the initial investment.

For Any Inquiries

Regarding Tax Incentives (Solar Tax Incentive Malaysia) & SME Tax Rebate for Solar Panel Installation (Solar Installation Tax Deduction)

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.