Reinvestment Allowance 2026: Expand Your Business

What is Reinvestment Allowance?

Reinvestment allowance rewards businesses that reinvest profits into new equipment. When you expand your business, you get special tax deductions.

This incentive encourages business growth and expansion.

Who Qualifies for Reinvestment Allowance?

Reinvestment allowance applies to:

• Existing businesses: Must have operated for at least 36 months
• Profitable operations: Must show chargeable income
• Expansion projects: Increasing capacity or modernizing
• Manufacturing & agriculture: Primary qualifying sectors

Reinvestment Allowance Rates

Standard Rate: 60% of qualifying capital expenditure

Maximum Allowance: 70% of chargeable income

Example: RM100,000 expansion equipment
• Reinvestment allowance: RM60,000 (60%)

Bank vs. Ing Heng: Same Allowance, Better Cash Flow

Factor	Bank	Ing Heng Credit
Down Payment	10-20%	0%
Reinvestment Allowance	Same	Same
Cash for Expansion	Reduced	Preserved

How to Claim Reinvestment Allowance

Step 1: Verify Eligibility

• Check if you've operated 36+ months
• Confirm you have chargeable income
• Verify expansion qualifies (not replacement)

Step 2: Submit Application

• Apply to LHDN with expansion details
• Provide equipment specifications
• Show how it expands capacity

Step 3: Claim the Allowance

• Claim in year of assessment
• Set off against chargeable income
• Carry forward unused allowance

Reinvestment vs. Replacement

Reinvestment Qualifies:

• Adding new equipment to expand capacity
• Upgrading to larger or better equipment
• Diversifying into new product lines
• Opening new production lines

Replacement Does Not Qualify:

• Replacing old equipment with similar
• Maintenance and repairs
• Same capacity, different equipment

Reinvestment Allowance + 0% Down Payment

Perfect combination for expansion:

• 60% allowance: On qualifying equipment
• 0% down payment: Preserve cash flow
• 100% full loan: Finance entire expansion
• Interest deduction: Additional tax savings

Expansion Example

Manufacturing Business Expansion

Adding new production line:

• Equipment cost: RM250,000
• Reinvestment allowance (60%): RM150,000
• Chargeable income: RM200,000
• Maximum claim (70%): RM140,000
• Unused allowance: RM10,000 carried forward

With 0% Down Payment:
• No upfront payment required
• RM25,000-RM50,000 cash preserved
• Available for working capital during expansion

Used Equipment for Reinvestment

Used equipment can qualify:

• Some used equipment: Qualifies for reinvestment allowance
• Banks reject: Equipment older than 5 years
• Ing Heng accepts: Any age qualifying equipment
• Cost advantage: Lower cost means faster ROI

2026 Reinvestment Planning

1. Check eligibility: 36+ months in operation
2. Plan expansion: Identify growth opportunities
3. Get approval: Apply before purchasing
4. Use 0% down: Preserve expansion capital
5. Document everything: Prove expansion, not replacement

Real Expansion Story

"Manufacturing furniture for 5 years. Wanted to add new production line. Applied for reinvestment allowance. Bought RM300,000 equipment. Got 60% allowance = RM180,000. Chargeable income was RM250,000. Maximum claim 70% = RM175,000. Saved RM42,000 in taxes. Used 0% down payment financing. Preserved RM30,000 cash for hiring and training. Production capacity increased 80%. Reinvestment allowance made expansion affordable."

— Ong Kim Seng, Furniture Manufacturer

Expand Your Business in 2026

Reinvestment allowance rewards expansion. 0% down payment preserves cash. 100% full loan finances growth. NO age limit on qualifying equipment.

We approve in 24-48 hours. Start your expansion and claim reinvestment allowance today.