Msc Malaysia Status 4.0 msc status

What is a Non IP base derived income according to OECD BEPs Action 5 minimum standard?


The OECD's Action 5 Report placed a renewed focus on requiring Substantial Activity for any preferential regime, and the "nexus approach" is the substantial activity requirement developed for IP regimes. The Nexus Approach requires a link between the income benefiting from the IP regime and the extent to which the taxpayer has undertaken the underlying R&D that generated the IP asset



But what exactly is Non IP derived income?


If according to OECD's Nexus Approach you don't have an IP regime, then you are considered to be Non IP regime and thus you will not benefit from tax exemption unless you also have substantial activities (more opex). But OECD made an exception to the way you can benefit from tax exemption if you are in the non-ip regime! Now, if you are Non IP regime, then you will need to do a substantive activity like employing a large number of knowledge workers who earned a minimum set of salary. And according to Mdec's requirement, you will need to put up a minmum set of paid up capital. You will see these conditions as set out below the table


As regards to the form of approved activities, you will need to have your business model based on Industry 4.0 elements as shown on the table below.


1. Big data analytics
2. Artificial intelligence (machine learning, deep learning)
3. Fintech
4. Internet of things
5. Cybersecurity (technology/software/design and support)
6. Data centre, edge and cloud (technology/software/design and support)
7. Blockchain
8. Creative media technology
9. Sharing economy platform
10. User interface and user experience
11. Integrated circuit design and embedded software
12. Additive Manufacturing ( 3D technology/software/design and support)
13. Robotic (technology/software/design)
14. Autonomous (technology/software/design and support)
15. Systems or network architecture design and support
16.

Global business services or knowledge process outsourcing excluding:

(a) Non-technical

(b) Low value call centre

(c) Data entry

(d) Recruitment process outsourcing


Further to this, additional sectors like Edutech, Agritech and Proptech will be encouraged as these sectors will see great growth in the coming years.