Government measures to encourage venture capital

PUTRAJAYA: The government has introduced five measures under the 2018 Budget to encourage venture capital activities to overcome the constraints of small companies such as start-ups in obtaining financing to expand their market.

Prime Minister Datuk Seri Najib Tun Razak said for the first measure, the major institutional investors would provide a sum of RM1bil for investment in venture capital in main selected sectors, coordinated by the Securities Commission.

“The government would also expand income tax exemption to include management and performance fees received by venture capital management company, effective year assessment 2018 to 2022,” he said in tabling the 2018 Budget in the Parliament today.

Najib, who is also the Finance Minister, said the government also proposed to reduce the minimum investment in venture companies to 50 per cent from 70 per cent, effective year of assessment 2018 to 2022, to facilitate venture capital companies to invest in venture companies.

“Companies or individuals investing in venture capital is provided tax deduction equivalent to the amount of the investment made in the venture companies, limited to a maximum of RM20mil annually,” he said.

He said the government would also extend the income tax exemption incentive equivalent to the amount of investment made by angel investors in venture companies to Dec 31, 2020. - Bernama