ECF Tax Exemption Filing Guide and Clarification

Well, well, well... To all Equity Crowdfunding (ECF) investors, you should be getting the confirmation certificates for those of you, ECF investors, who are entitled to income tax exemptions for the Assessment Year 2023 (YA2023).

ECF investments made by individuals in 2021 would be eligible for the tax exemption in YA 2023. What are the other eligible requirements? Still remember?

(#Throwback here for you to read: How to Qualify for ECF Tax Incentive in Malaysia?) 👈

Coming back to this topic, how to file it during tax e-filing submission? 👀

Please find the said clarifications and guidance as the following:

For your easy reference, you may refer to the Nota Penerangan BE 2023 online: https://ef.hasil.gov.my/eBE2024/Pdf/Nota_BE.pdf

Further, for the ECF Investors who may have filed for the tax returns without including the ECF tax exemption, you may find the guidance to amend your filing in LHDN’s website based on the following link, if you deem it appropriate:

If you have any questions or require further clarification, please seek help from your respective ECF operators.

Note: Only ECF investments made by individuals in 2021 would be eligible for the tax exemption in YA 2023. 

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I am ECF investors also, but via the LLP structure, why I am not entitled for the tax exemption? (read also 2025 update below 💥)

According to the Securities Commission Malaysia's recent update on tax exemption FAQs dated 12/12/23 (Question 8), it has been clarified that only nominee companies incorporated under the Companies Act 2016 are eligible for this tax exemption. 😢

Unfortunately, LLPs investors, which are governed by the Limited Liability Partnerships Act 2012 (Act 743), are not currently eligible for this tax exemption based on the existing guidelines.

*** LLP = Limited Liability Partnership

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ISSUES WITH FILING AMOUNT LOWER THAN RM5,000 

ECF operators are aware that some ECF investors are facing an issue in which the LHDN website version of the Borang Nyata Individu/Return Form of an Individual prohibits individuals to include an amount lower than RM5,000 in the required field. 💥💥💥

They have accordingly highlighted the issues to the concerned authorities, and was informed by LHDN that it is in the process of making the necessary improvements to their website.

Update on 1st April 2024:

LHDNM have made the necessary website improvements 👍👍👍. Affected investors can now proceed to file their tax returns.

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Update: March 2025

Please be reminded to check about the eligibility of your investment for tax exemption.  Determining what is eligible for tax exemption depends on several factors including the timing and nature of your investment, and not all of the deals are eligible.  

For example, ECF deals in 2022 using LLP structures do not qualify for tax exemptions.

You can find more information in the following documents:

• Income Tax (Exemption) (No. 4) Order 2022 [P.U. (A) 142] – This applies to direct and nominee investors only. LINK
• Income Tax (Exemption) (No. 4) Order 2022 (AMENDMENT) Order 2024 [P.U. (A) 367] – This update includes LLPs as eligible. LINK

Summary:

Order 2022
(i) 1 January 2021 to 31 December 2023
(ii) nominee company only

Order 2024
(i) 1 January 2024 to 31 December 2026
(ii) nominee and/or limited liability partnership

If you have further questions about the tax treatment and eligibility of your specific investment, we recommend you consult with your tax advisor for guidance as needed.

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