How do capital allowances work for equipment and vehicles in Malaysia?
Because accounting depreciation is not deductible, a company claims capital allowances on qualifying assets: an initial allowance plus annual allowances. General plant and machinery gets 20% initial and 14% annual, and assets under RM2,000 can be written off in full, up to a total of RM20,000.
Capital allowances replace depreciation for tax. The company claims an initial allowance in the year of purchase, then yearly allowances on the cost until it is fully written off.
Typical rates (per PwC):
| Asset | Initial | Annual |
|---|---|---|
| General plant and machinery | 20% | 14% |
| Heavy machinery | 20% | 20% |
| Furniture, fittings, office equipment | 20% | 10% |
| ICT equipment and software | 40% | 20% |
| Motor vehicles (cost caps apply) | 20% | 20% |
| Industrial building | 10% | 3% |
| Small value assets under RM2,000 each | n/a | 100% |
Small value assets are capped at a total of RM20,000 per year.
Motor vehicles: the qualifying cost is capped, generally at RM100,000 for a new non-commercial car costing RM150,000 or less and RM50,000 for others. Commercial vehicles are not subject to these caps.
Conditions:
- The asset must be used in the business and owned by the company when the expenditure is incurred.
- Selling the asset can lead to a balancing charge or allowance.
- Unused allowances can be carried forward for later years.
Special accelerated rates exist for certain assets such as computers and green equipment. Check the current rates for the year you buy.
Legal basis
- Income Tax Act 1967, Schedule 3
- Income Tax Act 1967, s.19 (small value assets)
Sources
Applies to YA 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
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