# Forest City Special Financial Zone — Not the Same Thing as the JS-SEZ

> What the Forest City Special Financial Zone grants, the eleven gazetted orders behind it, the single family office scheme, and why it is routinely confused with the Johor-Singapore Special Economic Zone.

- Category: business
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/business/forest-city-sfz

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Two schemes sit on the same stretch of Johor coastline, and almost every summary written about
them merges the two. The result is advice that sends a manufacturer to the Securities Commission
and a family office to MIDA.

They are different schemes. The Forest City Special Financial Zone (SFZ) is a **financial
services** zone whose incentives were gazetted in **eleven instruments on 3 October 2025**. The
Johor-Singapore Special Economic Zone package is a **manufacturing and services** package run by
MIDA under a guideline that has not been gazetted at all.

Forest City is Flagship I of the nine JS-SEZ flagship zones. MIDA's own guideline says so, and in
the same paragraph excludes it: the MIDA package covers **Flagships A to G**, and Forest City runs
on a package announced separately on **20 September 2024**.

## Where the zone actually is

Every one of the eleven orders defines the zone identically: **Pulau 1, Forest City, situated in
the Mukim of Tanjung Kupang, District of Johor Bahru, Johore, as shown in Gazette Plan PW50276
deposited in the Office of the Director of Survey and Mapping, Johore**.

That is a surveyed parcel — one island — not the whole Forest City development and certainly not
Iskandar Puteri. An address inside Forest City is not by itself an address inside the SFZ.

## Who counts as a qualifying person

The same nine-limb definition recurs across the orders, and it is worth reading as a whole because
it tells you exactly what the zone is for:

- a person licensed under section 10 of the Financial Services Act 2013 or the Islamic Financial
  Services Act 2013;
- a Capital Market Services Licence holder under the Capital Markets and Services Act 2007;
- a recognised market operator registered under s.34 of that Act, other than an individual;
- a registered person under s.76, other than an individual;
- a person providing capital market services registered under s.76A, other than an individual;
- a **single family fund company** verified by the Securities Commission;
- a fintech, insurtech, regtech or Islamic fintech company holding **MSC Malaysia Status or
  Malaysia Digital Status** and verified by MDEC;
- a **foreign payment system operator** approved under s.11 of the Financial Services Act 2013 or
  the Islamic Financial Services Act 2013 to operate a payment system in the zone; and
- a **centralised services entity providing financial global business services** with MSC Malaysia
  or Malaysia Digital Status, verified by MDEC.

Note the two gatekeepers. Family offices go through the **Securities Commission**. Fintech and
financial global business services go through **MDEC**, riding on the Malaysia Digital framework.
MIDA appears nowhere.

## The single family office scheme

This is the headline, and the one that draws the most inaccurate summaries.

Under **P.U.(A) 350/2025**, made under s.154(1)(b) read with s.6(1A) and paragraph 2 of Part XVII
of Schedule 1 to the Income Tax Act 1967, the rate of income tax on the chargeable income of an
approved company carrying on a qualifying activity is **zero per cent for the first period of ten
years of assessment, and zero per cent for the following ten**.

The rate does not step up. The **conditions** do.

| | First 10 years of assessment | Following 10 years of assessment |
| --- | --- | --- |
| Assets under management | ≥ RM30 million | ≥ RM50 million |
| Local investment | ≥ RM10 million **or** 10% of AUM, **whichever is lower** | ≥ RM10 million **or** 10% of AUM, **whichever is greater** |
| Full-time employees | ≥ 2, one a professional investor on ≥ RM10,000 salary | ≥ 4 |
| Annual local operating expenditure | ≥ RM500,000 | ≥ RM650,000 |
| Bank deposits for local investment | Not permitted | — |
| Other business in Malaysia | None permitted | — |

The **lower / greater** switch in the local investment test is the single most easily missed detail
in the scheme. In the first decade, a family office with RM100 million under management invests
RM10 million locally. In the second, the same office must invest **RM10 million**. But an office
that has grown to RM300 million under management invests RM10 million in decade one and **RM30
million** in decade two. The obligation scales with success.

Each year, the approved company must obtain a **certification from the Securities Commission**
that the conditions were met. Applications for the scheme are made to the Minister through the
Securities Commission between **1 September 2024 and 31 December 2034**, and the specified years
of assessment run from the year the first certification is obtained.

The scheme also requires compliance with **s.65B of the Income Tax Act 1967** and with any
Securities Commission guidelines.

**And it is exclusive.** A company is not a qualifying company if, in the specified years, it
claims a Schedule 7B investment allowance, holds a Promotion of Investments Act 1986 incentive,
holds a s.127(3)(b) or s.127(3A) exemption, or has another approved s.154 incentive scheme. Only
three deductions survive: Schedule 3 allowances, audit expenditure under P.U.(A) 129/2006, and
secretarial and tax filing fees under P.U.(A) 162/2020.

## The companion exemption for getting assets in

A family office is useless if you cannot move the family's assets into it without a tax charge on
the way. **P.U.(A) 351/2025** handles that.

The Minister exempts a company, limited liability partnership, trust body or co-operative society
wholly owned directly or indirectly by a member of a single family from income tax on gains or
profits from **disposing shares of an unlisted Malaysian company to a single family fund company**.

The conditions are tight. The fund company must hold a Securities Commission certification letter;
the disposal must be made **within twelve months from the date that letter is issued**; the
disposal must fall between **1 September 2024 and 31 December 2034**; and the **ultimate beneficial
owners on both sides must be members of the same single family**.

Two exclusions matter. The order does not apply where the gain is chargeable as **business income
under s.4(a)** — a share-dealing business cannot use it. And it does not apply where a
s.127(3)(b) or s.127(3A) exemption has already been granted on the same disposal. Losses on such
disposals are disregarded for s.65E(5) and (6).

"Single family" is defined across all the orders as individuals who are **lineal descendants of a
single ancestor**, including spouse, biological child, stepchild, and a child adopted under any
written law.

## Withholding tax relief for foreign service providers

**P.U.(A) 357/2025** exempts any **non-resident person** from Malaysian income tax on income from
s.4A(i), s.4A(ii) and s.4A(iii) services and rentals, and on s.4(f) gains and profits, where the
income is received **on or before 31 August 2034** from a qualifying person operating in the zone.

Crucially, paragraph 3 states that **ss.109B and 109F shall not apply** to that income. That
removes the withholding obligation itself, not merely the ultimate charge — the practical
difference between a payer having to withhold and reclaim, and simply paying gross.

## The property and set-up reliefs

**Industrial building allowance (P.U.(A) 359/2025).** A **commercial** building constructed or
purchased by a qualifying person in the zone is **deemed an industrial building** for Schedule 3
purposes, provided the qualifying person owns it and uses it for a listed business activity. The
allowance is **one-tenth of the capital expenditure** in the year and each of the nine following
years. Capital expenditure incurred **after 31 December 2034** does not qualify.

There is a genuine clawback here, and it is the only one in the package: if the building is
**disposed of within two years** of the capital expenditure being incurred — by sale, transfer,
assignment, demolition, destruction, or ceasing to be used for the Rules' purposes — a **balancing
charge equal to the whole allowance granted** is charged in the year of disposal.

**Relocation cost deduction (P.U.(A) 360/2025).** A deduction for the cost of relocating a business
into the zone, capped at **RM500,000**, covering planning, execution or supervision of the
relocation, packing and unpacking, transportation, insurance premiums for the relocation, and
warehousing. Relocation must occur between **1 September 2024 and 31 December 2034**, and the cost
must be **certified by an external auditor**.

**Real property gains tax (P.U.(A) 358/2025).** Individuals who are **not citizens and not
permanent residents** are exempted from part of the Schedule 5 charge on disposals in the zone: in
the **fourth year** after acquisition the effective charge is reduced to **20 per cent**, in the
**fifth year** to **15 per cent**, and from the **sixth year onwards** the gain is fully exempt.
The sale and purchase agreement must be executed between **1 September 2024 and 31 July 2034** and
**duly stamped before 1 September 2034**.

**Stamp duty.** Four orders, all remitting **50 per cent**:

- **P.U.(A) 353/2025** — loan or financing agreements for individuals buying a residential or
  commercial unit;
- **P.U.(A) 354/2025** — instruments of transfer between a developer and individuals;
- **P.U.(A) 355/2025** — loan or financing agreements for qualifying persons;
- **P.U.(A) 356/2025** — instruments of transfer between a developer and qualifying persons.

All four carry the same restriction, and it is severe: the unit's **construction must have been
completed before 1 September 2024**, and the sale and purchase agreement must be executed between
**1 September 2024 and 31 December 2034**. There is also an anti-churn rule — the relief is
unavailable where an agreement for the same unit was executed before 1 September 2024 and later
cancelled by the same buyer. **The Iskandar Regional Development Authority verifies compliance
with these conditions.**

Separately, **P.U.(A) 352/2025** fully exempts stamp duty on an instrument transferring a
qualifying asset between a single family fund company and a family member or a family-owned
company or trust body, executed **within one year** of the Securities Commission certification
letter, with the letter attached.

## Common mistakes

**Calling Forest City part of the JS-SEZ incentive package.** It is inside the zone and outside the
package. MIDA's guideline draws the line explicitly.

**Sending a manufacturer to Forest City.** The nine qualifying-person limbs are all financial
services, fintech or family office. There is no manufacturing route.

**Assuming the family office rate steps up after ten years.** It does not — it stays at zero. The
substance requirements rise instead, and the local investment test flips from *whichever is lower*
to *whichever is greater*.

**Missing the twelve-month window on share transfers into the fund company.** The exemption in
P.U.(A) 351/2025 runs twelve months from the date of the Securities Commission certification
letter, not from incorporation and not from the start of the scheme.

**Buying a new-build and expecting stamp duty relief.** All four stamp duty orders require
construction to have been **completed before 1 September 2024**. The relief was designed to clear
existing stock.

**Stacking incentives.** The family office rules disqualify a company holding a Promotion of
Investments Act incentive, a s.127(3)(b) exemption, or another s.154 scheme.

**Forgetting the two-year disposal rule on the industrial building allowance.** Selling a building
inside two years triggers a balancing charge equal to the whole allowance claimed.

## What's next

If you are setting up a family office, the route is an application to the Minister **through the
Securities Commission**, and the practical work is engineering the substance — AUM, local
investment, headcount and local operating expenditure — so that annual certification is
comfortable rather than marginal in both decades.

If you are a fintech or a financial global business services entity, the entry point is **Malaysia
Digital or MSC Malaysia Status through MDEC**, then verification for the zone.

If you are a manufacturer or a services operator, you are looking at the wrong scheme. Read the
JS-SEZ guide instead, and check which flagship zone your activity is assigned to before doing
anything else.

## Sources

- Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) Rules 2025, P.U.(A) 350/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3109140/P.U. (A) 350_2025.pdf (Attorney General's Chambers)
- Income Tax (Single Family Office Incentive Scheme) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025, P.U.(A) 351/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3106440/PUA 351_2025.pdf (Attorney General's Chambers)
- Income Tax (Income of Non-resident Person) (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025, P.U.(A) 357/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3106472/PUA 357_2025.pdf (Attorney General's Chambers)
- Real Property Gains Tax (Pulau 1 of Forest City Special Financial Zone) (Exemption) Order 2025, P.U.(A) 358/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3106535/P.U. (A) 358_2025.pdf (Attorney General's Chambers)
- Income Tax (Industrial Building Allowance) (Pulau 1 of Forest City Special Financial Zone) Rules 2025, P.U.(A) 359/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3106509/PUA 359_2025.pdf (Attorney General's Chambers)
- Income Tax (Deduction of Cost for Relocation of Business) (Pulau 1 of Forest City Special Financial Zone) Rules 2025, P.U.(A) 360/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3106521/P.U. (A) 360_2025.pdf (Attorney General's Chambers)
- Guidelines for Johor-Singapore Special Economic Zone (JS-SEZ) Tax Incentive Package, Version 2 — https://www.mida.gov.my/wp-content/uploads/2025/04/Guideline-JSSEZ-V2.pdf (MIDA)

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