{"id":2518,"date":"2012-09-28T11:08:09","date_gmt":"2012-09-28T16:08:09","guid":{"rendered":"http:\/\/www.bytebot.net\/blog\/?p=2518"},"modified":"2012-09-28T19:36:20","modified_gmt":"2012-09-29T00:36:20","slug":"tax-incentives-for-angel-investors-in-malaysia","status":"publish","type":"post","link":"http:\/\/www.bytebot.net\/blog\/archives\/2012\/09\/28\/tax-incentives-for-angel-investors-in-malaysia","title":{"rendered":"Tax incentives for angel investors in Malaysia"},"content":{"rendered":"

Today there were some incentives for angel investors<\/a> announced in Malaysia as part of Budget 2013.<\/p>\n

Who qualifies as an angel investor?<\/strong> Your annual income must exceed RM180,000 per annum and you must be a tax resident to qualify for the deduction.<\/p>\n

What do you get?<\/strong> Total investment as an angel will be allowed as a deduction against all income.<\/p>\n

When is this valid?<\/strong> From Jan 1 2013 to Dec 31 2017, and you need to apply via the Ministry of Finance.<\/p>\n

Some details<\/strong>: as an angel, you must hold at least 30% of the shares in the company you’re investing in for 2 years, and you must pay up for the shares in cash. The company needs to have at least 51% Malaysian ownership.<\/p>\n

What do I think?<\/strong><\/p>\n

Quite simply, the qualification income is something I see some people complain about, but this is similar to what America calls an accredited investor<\/a>. I have no issue with the RM180,000\/annum income. Feel free to hit up all those people you know with Visa Infinite, World MasterCard, Premier banking, etc. ;-)<\/p>\n

Application via the Ministry of Finance (MoF) seems a little dodgy. The potential of red tape here is high. This is definitely a turn-off.<\/p>\n

Does this benefit startups? Angel investors shouldn’t be making a 30% investment in a company. It is ridiculous. Consider giving away 20% of the company in an angel round, sure, but with just one angel walking away with 30% of the shares for 2 years?!?<\/p>\n

Angels in Malaysia typically make RM20-50k investments (for up to 20% on the high side from what I’ve gathered). Very rarely do they hit the RM100k mark. Most accelerators are taking up an average of 6-8% for about RM15-18k investment already for 3 founders.<\/p>\n

Startup founders are also not going to want to give away 30% of the company for a small sum of money. Many believe they are worth more. I guess you have to thank the media hype cycle for this.<\/p>\n

Alas, it is a good start for Malaysia to be looking out for such things. Possibility to help boost the startup ecosystem<\/a>.<\/p>\n

Update:<\/strong>\u00a0I thought about this a little more and realised that I applied a very myopic view to this piece. Reason is simple: I focus on tech startups & the angels that go with them<\/strong>. In this day and age, software (be it mobile or web-based) doesn’t take much in terms of cash to prove yourself. In other industries like manufacturing, biotechnology, film making, etc. you might look at much higher investments for 30% or more, but it isn’t something I know much about.<\/p>\n

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