Malaysia’s Forest City Special Financial Zone is offering a 5% corporate tax rate to eligible fintech companies and payment-system operators, as the development seeks to attract technology-enabled financial services businesses near Singapore.
The preferential rate is available for 10 consecutive assessment years and may be extended for another 10 years, subject to approval and continued compliance, according to details released by Forest City.
It applies to qualifying fintech, financial global business services and foreign payment system operator activities conducted on Pulau 1 in Forest City.
Applicants must use at least one technology identified by the Malaysia Digital Economy Corporation, including artificial intelligence, big data analytics, blockchain, cloud computing, cybersecurity or automation.
MDEC processes applications, while Malaysia’s National Committee on Investment assesses them.
The incentive is not a blanket tax reduction for every fintech or AI company operating in Forest City.
Applicants must meet requirements covering their business activities, physical presence, staffing, operating expenditure, regulatory licences, environmental commitments, and annual compliance reporting.
The Forest City incentive is separate from Malaysia Digital Status and the national Malaysia Digital tax programme.
Companies do not need Malaysia Digital Status to seek the Forest City rate, but they cannot receive another tax incentive for the same qualifying activity.
Under the national programme, eligible new investments may receive a zero tax rate on qualifying intellectual-property income and a 5% or 10% rate on qualifying non-IP income for up to 10 years.
Companies may alternatively apply for an investment tax allowance covering 60% or 100% of qualifying capital expenditure.
That allowance does not amount to a complete exemption from corporate income tax, Forest City said, addressing potential confusion surrounding the 100% figure.
The incentives give Malaysia another tool to compete for regional fintech investment, particularly from companies seeking access to Singapore and Southeast Asian markets.
However, their impact will depend on whether applicants can maintain substantive operations in Forest City rather than using the zone primarily for tax structuring.
Invest Johor recorded 260 cumulative investor enquiries for the zone by June 2026, against an investment target of 2 billion ringgit.