The Malaysian government unveiled a series of tax incentives aimed at reviving the Forest City special financial zone, including a 0% to 5% corporate tax rate and 0% tax for family offices. These measures are designed to attract international capital, businesses, and high-net-worth individuals to the area.
Finance Minister II Datuk Seri Amir Hamzah Azizan announced a 15% personal income tax rate for knowledge workers and Malaysians who choose to work in Forest City, along with a 0% tax rate for family offices. The government aims to have the scheme operational by the first quarter of 2025.
The incentives are part of a broader effort to position Forest City, a 1,400-hectare development in Johor, as a hub for global financial services, financial technology, and foreign payment system operators. Forest City, which was declared a special financial zone in August 2023, has experienced slower-than-expected growth and currently houses a small fraction of its target 700,000 population.
In addition to tax incentives, banks, insurance companies, and other financial institutions in Forest City will benefit from special deductions, industrial building allowances, and withholding tax exemptions. Locally incorporated foreign banks will also have increased flexibility to open branches and engage in offshore borrowing and foreign currency investments.
Malaysia is seeking to capitalize on the growing global market of single family offices, which is expected to expand to over 10,720 offices managing US$5.4 trillion in assets by 2030.
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