Investing in commercial solar in Malaysia is no longer just about reducing electricity costs. For many businesses, it is also a way to improve project returns through green technology tax incentives, capital allowance and better access to green financing.
Through the Green Investment Tax Allowance (GITA) and Green Income Tax Exemption (GITE) schemes, eligible Malaysian businesses may benefit from investment tax allowances or income tax exemptions when investing in or providing green technology solutions, subject to approval by the relevant authorities and the prevailing guidelines.
Whether you are a manufacturer, factory owner, warehouse operator, commercial building owner, hotel, hospital, education provider or company exploring a solar power purchase agreement (PPA), understanding the incentive structure early can help you choose the right solar ownership or financing model.
This 2026 guide explains the main Malaysia solar tax incentives for commercial and industrial solar projects, how much they may be worth in Ringgit terms, how capital allowance may interact with GITA, and what to check before your project begins.
Quick Summary: Which Malaysia Solar Tax Incentive May Apply?
| Scenario | Most Relevant Route | Key 2026 Point |
| You buy and own a rooftop solar PV system for your own business electricity use. | GITA Asset for Own Consumption | For rooftop solar PV used for own consumption, the GITA rate is generally 60% of qualifying capital expenditure, set off against up to 70% of statutory income. |
| You develop or invest in a qualifying renewable energy project as part of your business activities. | GITA Project for Business Purposes | For approved solar renewable energy projects, the GITA rate is generally 100% of qualifying capital expenditure, set off against up to 70% of statutory income over a 5-year incentive period. |
| You provide approved solar leasing, solar PPA or qualifying solar services to customers. | GITE Solar Leasing | Income tax exemption of 70% of statutory income may apply for eligible income from approved solar PPA or solar leasing activity, with the incentive period depending on approved capacity. |
| You need financing support rather than a tax incentive. | GTFS 5.0 / green financing | GTFS 5.0 is a financing facilitation scheme, not a tax allowance. It should be checked separately from GITA/GITE. |
Overview of Green Technology Tax Incentives in Malaysia
Malaysia’s green technology tax incentives generally fall into three (3) categories:
| Incentive | Applicable For | Main Benefit |
|---|---|---|
| GITA Asset for Own Consumption | Businesses that acquire qualifying green technology assets for their own use, including approved renewable energy systems such as rooftop solar photovoltaic (PV) systems. | Investment Tax Allowance of generally 60% of qualifying capital expenditure for rooftop solar PV systems installed for own consumption, subject to approval, asset ownership, MyHIJAU/MGTC verification and the applicable conditions. |
| GITA Project for Business Purposes | Businesses that undertake qualifying renewable energy or green technology projects as part of their business activities. | Investment Tax Allowance of 100% of qualifying capital expenditure for approved solar renewable energy projects, which may be utilised to offset up to 70% of statutory income per year. The current incentive period for approved solar projects is 5 years. |
| GITE Solar Leasing | Businesses carrying out approved solar leasing, solar PPA or qualifying solar service activities. | Income tax exemption of 70% of statutory income derived from qualifying solar leasing/PPA income. The current incentive period is generally 5 years for >3MW to <=10MW and 10 years for >10MW to <=30MW, subject to approval conditions. |
All incentives are subject to approval. Eligibility depends on the project structure, ownership model, qualifying expenditure, timing of application and compliance with the prevailing guidelines issued by MIDA, MGTC/MyHIJAU, SEDA and other relevant authorities.
How Much Can a Business Save? A Worked RM1,000,000 Example
Percentages can be difficult to understand until they are converted into Ringgit. The example below shows how GITA Asset for Own Consumption may work for a business that buys a RM1,000,000 rooftop solar PV system for its own electricity consumption.
Assumptions: The company is a Malaysian tax-resident company, the project qualifies for GITA Asset at 60%, the company is subject to a 24% corporate tax rate, the asset is approved and verified, the company has sufficient statutory income over time, and the application/claim requirements are satisfied. The figures are illustrative only and are not a guaranteed entitlement.
| Item | Calculation | Illustrative Result |
| Solar PV system cost | Given | RM1,000,000 |
| GITA Asset allowance | 60% x RM1,000,000 | RM600,000 allowance |
| Potential tax saving from GITA | RM600,000 x 24% corporate tax rate | RM144,000 |
| Effective GITA-only benefit | RM144,000 / RM1,000,000 | 14.4% of system cost |
The allowance is not automatically used in one year. It is generally absorbed against up to 70% of statutory income for the relevant business source, with unutilised amounts carried forward subject to the applicable rules.
| Year | Illustrative Statutory Income | 70% Set-Off Limit | GITA Used and Tax Impact |
| Year 1 | RM500,000 | RM350,000 | RM350,000 GITA used x 24% = RM84,000 tax saving. RM250,000 GITA balance carried forward. |
| Year 2 | RM400,000 | RM280,000 | RM250,000 GITA balance used x 24% = RM60,000 tax saving. GITA balance fully absorbed. |
| Total | RM900,000 | – | RM600,000 GITA used; total tax saving = RM144,000. |
This is why tax planning should be done before the solar project is finalised. A business with lower statutory income may still benefit, but the allowance may take longer to absorb.
Capital Allowance (CA): The Tax Benefit Many Solar Articles Miss
In addition to checking GITA, a business that owns a solar PV system should also review whether normal capital allowance is available on the solar asset. In Malaysia, capital allowance is generally given in lieu of depreciation for qualifying business assets, subject to ownership, business use and the rules under Schedule 3 of the Income Tax Act 1967.
This matters because GITA is an incentive allowance, while capital allowance is the normal tax mechanism for claiming qualifying capital expenditure on business assets. Where the conditions are met, capital allowance may be relevant, but businesses should not assume that the full GITA and full capital allowance benefits can always be fully utilised or claimed in the timing shown. The exact treatment, claim sequence and utilisation should be confirmed with the business’s tax adviser/LHDN, because the availability, rate and timing of capital allowance depend on the asset, ownership, usage, income position and applicable tax rules.
The table below illustrates how GITA Asset and capital allowance may affect the overall tax position of a business that purchases and owns a RM1,000,000 solar PV system, assuming all approval, ownership, business use, statutory income and tax conditions are satisfied.
| Component | Illustrative Calculation | Potential Tax Impact at 24% | Practical Note |
| GITA Asset | 60% x RM1,000,000 = RM600,000 allowance | RM144,000 | Subject to approval, 70% statutory income set-off and carry-forward rules. |
| Capital Allowance | Up to RM1,000,000 qualifying asset cost claimed over time, if eligible | Up to RM240,000 over time | Subject to ownership, business use, LHDN rules and applicable capital allowance rates. |
| Illustrative potential combined tax effect | RM144,000 + potential CA effect, if claimable and fully absorbed | Potentially up to RM384,000 over time under the stated assumptions | Equivalent to 38.4% of the RM1,000,000 system cost, if all assumptions are met. This is not a cash rebate. |
For a business deciding between outright purchase, solar leasing and a solar PPA, this comparison is important. Outright purchase may allow the business to access GITA Asset and capital allowance if the conditions are satisfied, but the final tax treatment should be confirmed with the business’s tax adviser. Under a PPA or leasing model, the system is usually owned by the solar provider, so the tax incentive position may sit with the asset owner or project owner instead of the electricity user.
GITA Asset for Own Consumption
Who Is It For?
GITA Asset for Own Consumption is designed for businesses that invest in approved green technology assets such as solar PV systems for their own operational use and electricity consumption.
For businesses investing in rooftop solar PV systems for own consumption, the applicable Investment Tax Allowance (ITA) is generally 60% of qualifying capital expenditure, subject to approval and the prevailing guidelines.
The allowance may be utilised to offset up to 70% of statutory income per year, helping businesses reduce their effective investment cost while improving the overall financial viability of their solar project.
Key 2026 Eligibility Points to Check
- The applicant should generally be a company incorporated under the Companies Act 2016 and resident in Malaysia.
- The qualifying capital expenditure must be incurred within the prescribed period from 1 January 2024 to 31 December 2026.
- The asset must be new, owned by the company, used in the business carried out in Malaysia, and used for own consumption rather than income generation.
- For solar, the asset/project should fall within the renewable energy system category and be verified by MGTC/MyHIJAU where required.
- The application is generally submitted to MGTC after commissioning, within 24 months from the date the qualifying capital expenditure is incurred, subject to the applicable guideline requirements.
Suitable Applicants
This incentive is generally suitable for businesses installing rooftop solar PV systems to power their own operations, including:
- Manufacturing facilities
- Factories
- Commercial office buildings
- Warehouses
- Hotels
- Shopping malls
- Hospitals
- Educational institutions
- Industrial facilities
In general, if your business is installing a rooftop solar PV system primarily to generate electricity for its own use rather than for sale or leasing, GITA Asset for Own Consumption is likely to be the most relevant green technology tax incentive.
GITA Project for Business Purposes
Who Is It For?
GITA Project for Business Purposes is designed for businesses undertaking approved renewable energy or green technology projects as part of their business activities.
Unlike GITA Asset for Own Consumption (which applies to green technology assets installed for a business’s own operational use), GITA Project for Business Purposes is intended for project-based investments undertaken as part of a business’s qualifying renewable energy or green technology activities, such as renewable energy development and qualifying green infrastructure projects.
Eligible businesses may enjoy an Investment Tax Allowance of 100% of qualifying capital expenditure, which may be utilised to offset up to 70% of statutory income per year, subject to approval and conditions under the applicable guidelines. For qualifying solar projects under GITA Project for Business Purposes, the qualifying capital expenditure period is currently five (5) years.
Key 2026 Eligibility Points to Check
- For renewable energy projects such as solar, the MIDA guideline currently places solar under the renewable energy source category with 100% GITA, 70% statutory income set-off and a 5-year incentive period.
- The application should generally be submitted to MIDA before the first qualifying capital expenditure is incurred for the proposed project.
- Qualifying capital expenditure for GITA Project should involve new green technology assets and may require MGTC verification.
- Applications for GITA Project for Business Purposes are currently accepted by MIDA for applications received from 1 January 2024 until 31 December 2026, subject to any further Government revision.
Suitable Applicants
This incentive is relevant to businesses involved in:
- Renewable energy project development
- Solar farm or utility-scale solar projects
- Green technology infrastructure projects
- Energy infrastructure projects that meet the applicable eligibility requirements
In general, GITA Project for Business Purposes applies to businesses that develop or invest in qualifying renewable energy or green technology projects as part of their core business activities and generate income from those projects.
Why Some Sources Say Solar GITA Is 60% and Others Say 100%
This is one of the most common areas of confusion in Malaysia solar tax incentive content. The difference usually comes from the incentive category being discussed.
| Incentive Category | Where It Usually Applies in Solar | Key GITA Rate to Know |
| GITA Asset for Own Consumption | A company buys and owns a rooftop solar PV system to reduce its own electricity bill. | Generally 60% for renewable energy system / RE project for own consumption. |
| GITA Project for Business Purposes | A company undertakes a qualifying solar renewable energy project as part of its business activities. | Generally 100% for approved solar renewable energy projects, with set-off against up to 70% of statutory income. |
This is why businesses should look beyond the headline incentive percentage and understand how the incentive applies in practice. The right tax incentive treatment will depend on how the solar PV system is being used and structured, whether it is for your own electricity consumption, income generation, leasing, a PPA arrangement, project development, or another approved model.
Taking time to clarify this early helps your business avoid making decisions based on assumptions and ensures that the expected tax benefits are aligned with the actual financing and ownership structure.
GITE Solar Leasing
Who Is It For?
GITE Solar Leasing is designed for businesses providing qualifying green technology services, including solar PV leasing and approved solar PPA structures.
This incentive supports businesses that enable other organisations to adopt solar energy through leasing arrangements, allowing end users to benefit from solar power without significant upfront capital expenditure.
Eligible businesses may enjoy an income tax exemption of 70% of statutory income derived from qualifying solar leasing/PPA income, subject to approval and conditions under the relevant guidelines.
Key 2026 Eligibility Points to Check
- The MIDA guideline currently provides 70% income tax exemption on statutory income for approved solar leasing activity.
- The incentive period is currently 5 years for approved capacity above 3MW and up to 10MW, and 10 years for approved capacity above 10MW and up to 30MW.
- The company should generally obtain SEDA verification first, and then submit the tax incentive application to MIDA together with the SEDA verification letter. The MIDA submission must be made within twelve (12) months from the date of the SEDA verification letter and before the issuance of the first sale invoice for the proposed project, subject to the prevailing guideline requirements.
- The company must also satisfy the applicable GITE Solar Leasing eligibility conditions, including being verified by SEDA and listed in the Registered Solar PV Investor (RPVI) Directory, maintaining at least sixty per cent (60%) Malaysian equity ownership, possessing a minimum aggregated installed solar PV capacity of 3MW that has achieved Commercial Operation Date, and employing at least five (5) full-time employees in Malaysia, including at least two (2) personnel competent in green technology.
- Annual verification and compliance requirements may apply throughout the incentive period.
Suitable Applicants
This incentive is generally relevant to:
- Solar leasing businesses that satisfy the prevailing eligibility requirements
- Renewable energy service providers offering solar leasing arrangements
- Businesses that own, finance, and lease solar PV systems to end users
In general, GITE Solar Leasing applies to businesses that generate recurring income by providing qualifying solar leasing or solar PPA services rather than transferring ownership of the solar PV system through an outright sale.
Other Solar Incentives and Programmes to Know in 2026
Solar ATAP
Solar Accelerated Transition Action Programme (Solar ATAP) is the key rooftop solar framework that came into operation in Peninsular Malaysia on 1 January 2026. It is not a tax incentive, but it matters because it affects how new solar PV systems are connected, commissioned, exported and credited.
Under the Solar ATAP framework, consumers may install and operate solar PV systems primarily for self-consumption and export surplus energy to the grid, up to the applicable Maximum Allowable Quantity (MAQ). Exported energy is credited within the same billing period; any unused balance is not carried forward and is deemed forfeited. Domestic consumers are credited based on the applicable Energy Charge, while non-domestic consumers are credited based on the Average System Marginal Price (Average SMP). The credit cannot be used to offset the Automatic Fuel Adjustment (AFA). This means businesses should model their savings carefully instead of relying on older assumptions from the previous NEM framework.
For commercial and industrial users, the Solar ATAP process may involve technical assessment requirements, commissioning documents, Solar ATAP contract documents and submission through TNB’s online platform after installation and commissioning. This should be planned together with the tax incentive timeline so the project documents are aligned.
Green Technology Financing Scheme 5.0 (GTFS 5.0) and Green Financing
The GTFS 5.0 is a financing facilitation scheme and should be considered separately from GITA and GITE. The current MyHIJAU/CGC information states that the scheme has an allocation of RM1.0 billion until 31 December 2026, or until the approved financing facility amount reaches the applicable allocation limit, and provides a 60% to 80% government guarantee on the green component cost financed by participating financial institutions.
For businesses, GTFS 5.0 may help improve access to financing, while GITA, GITE and capital allowance affect the tax profile of the project. The exact financing margin, guarantee coverage, tenure, documents and any interest/profit support should be confirmed directly with MGTC, CGC and the participating financier at the time of application.
MyHIJAU Directory
MyHIJAU is also relevant because the GITA Asset framework refers to qualifying green technology assets listed under the MyHIJAU Directory and verification by MGTC/MyHIJAU, depending on the category. Businesses should check this early when selecting equipment, vendors and project documents.
Why These Incentives Matter
Commercial solar already offers significant long-term electricity cost savings. When combined with available tax incentives and financing support, businesses may also benefit from:
- Reduced corporate tax liabilities
- Improved project cash flow
- Faster return on investment (ROI)
- Lower overall project costs
- Enhanced ESG and sustainability performance
- Long-term protection against rising electricity tariffs
- More attractive financing or ownership structures
For many businesses, these incentives make solar one of the most financially attractive infrastructure investments available today, provided the project is structured properly from the start.
How to Apply for GITA and GITE Incentives
The application process will vary depending on whether you are applying for GITA Asset for Own Consumption, GITA Project for Business Purposes or GITE Solar Leasing. However, the process generally involves the following steps:
Step 1: Determine the Applicable Incentive
The first step is to identify which incentive is most suitable for your project.
For example:
- Businesses installing solar PV systems for their own operational use will typically consider GITA Asset for Own Consumption.
- Businesses undertaking qualifying renewable energy or green technology projects as part of their business activities may consider GITA Project for Business Purposes.
- Companies providing qualifying solar leasing or solar PPA services may explore GITE Solar Leasing.
Step 2: Confirm Eligibility and Timing
Before proceeding, businesses should review both eligibility and timing. This is especially important because the key application sequence differs by incentive category.
| Incentive | Current Application Timeline (2026) |
| GITA Asset for Own Consumption | Application is generally submitted to MGTC after the asset/project has been commissioned and within 24 months from the date qualifying capital expenditure is incurred, subject to the applicable guidelines. |
| GITA Project for Business Purposes | Application should generally be submitted to MIDA before the first qualifying capital expenditure is incurred for the proposed project. |
| GITE Solar Leasing | SEDA verification is generally required first. The MIDA application must be submitted within the prescribed period and before the first sale invoice for the proposed project. |
Factors that may be considered include:
- Nature of the project or activity
- Ownership structure
- Type of solar installation
- Qualifying expenditure
- Compliance with the applicable incentive guidelines
- Whether the asset is used for own consumption or income generation
- Whether the project documents support the intended tax and financing structure
Step 3: Prepare Supporting Documents
Applicants are generally required to prepare supporting documents relating to the project and company.
Depending on the incentive category, these may include:
- Company information
- Project details
- Financial information
- Technical specifications
- Quotations or project cost estimates
- Other supporting documents required by the relevant authority
- Commissioning documents, licences or authority approvals, where applicable
- Solar ATAP, SEDA, MGTC/MyHIJAU or MIDA supporting documents, where applicable
Step 4: Submit the Application
Applications must be submitted to the relevant authority responsible for administering the incentive.
Depending on the incentive category, this may involve the Malaysian Investment Development Authority (MIDA) or the Malaysian Green Technology and Climate Change Corporation (MGTC).
Businesses should ensure that applications are submitted in accordance with the applicable incentive guidelines, as the submission timelines and eligibility requirements differ depending on whether the application is for GITA Asset for Own Consumption, GITA Project for Business Purposes or GITE Solar Leasing.
Step 5: Evaluation and Approval
The relevant authority will review the application and supporting documents to determine whether the project satisfies the applicable requirements.
Additional information or clarification may be requested during the assessment process.
If the application is approved, the applicant will receive an approval, verification or decision letter setting out the applicable incentive and any conditions attached to the approval.
Step 6: Project Implementation and Compliance
Following approval, businesses should continue to comply with the applicable incentive conditions, maintain supporting records, and satisfy any reporting, annual verification or compliance requirements imposed by the relevant authorities.
Important Considerations Before Starting Your Solar Project
Businesses should note that tax incentives are not automatic entitlements.
Eligibility depends on various factors, including:
- The nature and structure of the project
- Compliance with the applicable incentive guidelines
- Approval by the relevant authorities
- Submission of the required supporting documentation
- Compliance with the prescribed qualifying conditions
- Whether the solar asset is owned by the business, the solar provider or a project company
- Whether the incentive claim aligns with the accounting, tax and commercial documents
Proper planning before project commencement is essential to maximise available incentives and avoid missing application requirements. This is particularly important for GITA Project and GITE Solar Leasing, where the timing of capex, SEDA verification, MIDA submission and invoice issuance may affect eligibility.
Need Help Navigating the Application Process?
Understanding the eligibility requirements and application procedures can be challenging, especially for businesses applying for solar incentives for the first time.
At Avera Energy, we help businesses evaluate the suitability of available incentives, assess project viability, and structure commercial solar solutions that optimise both operational savings and financial returns.
We provide end-to-end support across the commercial solar journey, including:
- Commercial solar feasibility studies
- System design and optimisation
- Engineering, procurement, construction and commissioning (EPCC)
- Project implementation
- Financial analysis and ROI evaluation
- Guidance on government incentives and project structuring
- Comparison of outright purchase, solar PPA and leasing models
Our role is to help businesses understand how the current incentive framework may apply to their project and identify the most suitable approach based on their objectives, ownership preference, tax position and cash flow requirements.
Frequently Asked Questions
Can all businesses installing solar PV systems qualify for GITA?
Not necessarily. Eligibility depends on the nature of the project, ownership structure, compliance with the relevant guidelines and approval by the relevant authorities.
Is GITA the same as GITE?
No.
GITA provides an Investment Tax Allowance for qualifying green technology investments, while GITE provides an Income Tax Exemption for businesses providing qualifying green technology services, such as solar leasing.
Do these incentives automatically apply once I install solar?
No. GITA and GITE are not automatic. GITA Project for Business Purposes and GITE Solar Leasing generally require application/approval before specified project or invoice milestones, while GITA Asset for Own Consumption is generally submitted to MGTC after commissioning and within the prescribed period. Eligibility must be assessed based on the project structure, ownership, timing and compliance with the applicable guidelines.
Who approves GITA and GITE applications in Malaysia?
Applications are typically reviewed by relevant authorities such as the Malaysian Investment Development Authority (MIDA) and the Malaysian Green Technology and Climate Change Corporation (MGTC), depending on the incentive category. Currently, GITA Project for Business Purposes and GITE Solar Leasing applications are submitted to MIDA, while GITA Asset for Own Consumption applications are administered by MGTC.
Can residential solar projects qualify for these incentives?
Generally, these incentives are designed for commercial and industrial applications. Residential solar installations are typically not eligible under GITA or GITE frameworks.
Is there a deadline to apply for GITA or GITE incentives?
Yes. Under the current guidelines, applications for GITA Asset for Own Consumption, GITA Project for Business Purposes and GITE Solar Leasing are accepted until 31 December 2026, subject to any extension, revision or replacement of the prevailing guidelines by the Government.
For GITA Asset for Own Consumption, applicants must also submit their application within 24 months from the date the qualifying capital expenditure is incurred (or 36 months for Green Building projects), subject to the applicable guidelines and requirements.
Can capital allowance and GITA both be relevant?
Yes, they can both be relevant for an outright purchase structure where the business owns the solar asset, but the actual tax treatment, timing and claim sequence should be confirmed with the company’s tax adviser.
Capital allowance is subject to LHDN rules on qualifying expenditure, ownership and business use, while GITA is subject to separate approval/verification and incentive conditions.
Can GITA and GITE be combined?
Generally, a particular project or income stream would qualify under either GITA or GITE depending on its structure. Businesses undertaking multiple qualifying activities should obtain professional advice to determine whether different incentives may apply to different projects or entities.
Are these incentives guaranteed for every approved application?
No. Approval is subject to assessment by the relevant authorities, and conditions may be imposed depending on the project and prevailing guidelines. Even after approval or verification, actual utilisation of the incentive may still depend on compliance with conditions, statutory income, supporting records and LHDN review.
Ready to Explore Solar Tax Incentives for Your Business?
If you are planning a commercial solar project in Malaysia, the best time to review incentives is before the ownership structure, financing model, project documents and installation timeline are finalised.
Reach out to Avera Energy for a consultation. Our team can help you assess your solar options, estimate project returns and coordinate the right next steps for your business.
Note: The information in this article is updated as at 8 July 2026. As official guidelines may be updated from time to time, please refer to the latest guidelines issued by the relevant authorities and consult your appointed solar service provider and/or professional adviser before making any decision or application.
