# Special Zones and Hub Incentives Compared on Tax

> JS-SEZ, the Forest City Special Financial Zone, the Global Services Hub and the economic corridors compared on the four things that decide it — rate, tenure, substance conditions and what happens when you miss them.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/special-zones-and-hubs

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Two zones sit about twenty kilometres apart in south Johor, and the market treats
them as one thing. They are not. **The Forest City Special Financial Zone is a
Securities Commission regime for financial services. The JS-SEZ package is a MIDA
regime for manufacturing and services.** Different applications, different
regulators, different qualifying persons, different instruments — and, as it
happens, very different levels of legal completeness.

MIDA's own guideline is the source of the confusion and also the fix. It lists
**nine flagship zones** for the JS-SEZ and names Forest City as **Flagship I**.
Then it states that the guideline covers **Flagships A to G only**, that
Pengerang (Flagship H) was dealt with in the 2024 Budget, and that Forest City
(Flagship I) had *a comprehensive package of incentives announced on 20 September
2024*. Geographically inside; administratively separate.

## What does each zone actually give you?

| Regime | Regulator | Who qualifies | Headline rate | Tenure |
| --- | --- | --- | --- | --- |
| **JS-SEZ — manufacturing** | MIDA | AI and quantum supply chain, medical devices, pharmaceuticals, aerospace and MRO | **5%** above RM1 billion capex excluding land; **5%** at RM500m–RM1bn | **15 years**; **10 years** respectively |
| **JS-SEZ — specialty chemicals** | MIDA | Base chemicals, organic intermediates, specialty chemicals, fertilisers, polymers, oleochemicals | Tier 1 **5%**, Tier 2 **10%**; or ITA of **100%** / **60%** | Up to **10 years**, as 5 plus 5 |
| **JS-SEZ — Global Services Hub** | MIDA | Regional P&L plus strategic planning, corporate development, treasury and two more services | **5%** on services or trading and services income | **15 years** |
| **JS-SEZ — smart logistics** | MIDA | Regional distribution hub, integrated logistics, dangerous goods, cold chain | **ITA 100%**, against 100% of statutory income | Capex within **5 years** |
| **JS-SEZ — integrated tourism** | MIDA | Hotel of 80+ rooms plus one attraction | **ITA 100%**, against **70%** of statutory income | Capex within **5 years** |
| **Forest City SFZ — family office** | **Securities Commission** | Single family fund company on Pulau 1 | **0%**, then **0%** | **10 years of assessment, then a further 10** |
| **National Global Services Hub** | MIDA | Same functions, lower thresholds | Tier 1 **5%**, Tier 2 **10%** | **5 or 10 years** for a new company; **5 years** for an existing one, on value-added income |

The JS-SEZ window runs on applications received by MIDA from **1 January 2025 to
31 December 2034**. The national Global Services Hub runs **14 October 2023 to
31 December 2027** — it replaced the Principal Hub, which the MIDA guideline
records as having **ended on 31 December 2022**.

## Where the substance conditions actually bite

Rates are the part everyone quotes. The conditions are the part that decides
whether you keep them, and the two Global Services Hub tracks make the point
better than anything else, because they share a name and nothing else.

| Condition | National GS Hub | JS-SEZ GS Hub (Flagships A and B) |
| --- | --- | --- |
| Paid-up capital | RM2.5 million | RM2.5 million |
| Annual operating expenditure | As proposed, evaluated by MIDA | **At least RM50 million** |
| Network companies served | **7**, including 3 related | **10** |
| Annual sales turnover (trading income) | As proposed | **At least RM500 million** |
| High-value positions at RM10,000 a month | At least 50% filled by Malaysians | At least 50% filled by Malaysians |
| Key personnel at RM35,000 a month | Not a stated minimum | **At least 5** |
| Structured training | Not stated | **20% of the workforce** during the incentive period |
| MySIP interns | Not stated | **At least 3 Malaysian students a year** |
| Mandatory functions | Regional P&L, strategic planning, corporate development, plus two | The same **plus regional or global treasury** and fund management via onshore intermediaries |

A company that would comfortably clear the national scheme can fail the JS-SEZ
version on operating expenditure alone. The higher rate tenure — fifteen years
against five or ten — is what is being bought with those thresholds.

Forest City's substance test is different in kind, because it is a fund test
rather than a headcount test. Under **rule 6 of P.U.(A) 350/2025**, an approved
single family fund company must obtain annual certification from the Securities
Commission that, in each of the first ten years of assessment, it has at least
**two full-time employees, one of them a professional investor on at least
RM10,000**, annual local operating expenditure of at least **RM500,000**, assets
under management of at least **RM30 million**, and local investment of at least
**RM10 million or 10% of AUM, whichever is lower**. It must not have used bank
deposits for local investment and must carry on no other business in Malaysia.
For the second ten years the bar rises: **AUM of RM50 million**, local investment
of RM10 million or 10% of AUM **whichever is greater**, **four** full-time
employees, and local operating expenditure of **RM650,000**.

## The clawback is annual, and that is the design

Nothing here is granted once and kept. The JS-SEZ guideline states it plainly:
where an approved company **fails to comply with the stipulated conditions in any
year of assessment** during the special tax rate incentive period, it **is not
entitled to claim the special rate for that particular year** and is taxed at
prevailing rates. The Annual Compliance Report is due to MIDA **within seven
months after the end of each year of assessment**, for the whole incentive
period.

Two dated traps sit in front of that.

**Apply before the first sales invoice.** Commencement of operation is defined as
the date of the first sales invoice issued for the proposed project. Issue it
first and the application is out of time.

**Then hit the determination clock.** For a special tax rate, the application for
determination of the commencement year of assessment is due **not later than 24
months** from the approval letter. For an ITA, it is **36 months**, and the
JS-SEZ chemicals appendix states that failure means the approval-in-principle
letter is **automatically cancelled**.

Tiering follows the same annual logic as the New Incentive Framework: meeting the
minimum conditions earns Tier 2 for that year, meeting minimum plus additional
conditions earns Tier 1, and missing the minimum earns nothing for that year.

## What Forest City has that JS-SEZ does not

Forest City is legally the more finished of the two, and by a wide margin. On
3 October 2025 eleven instruments were gazetted together, all keyed to Pulau 1 as
shown in **Gazette Plan PW50276**:

- **P.U.(A) 350/2025 and 351/2025** — the Single Family Office rate and a
  companion exemption on the disposal of unlisted Malaysian shares into a single
  family fund company, for disposals made **1 September 2024 to 31 December 2034**
  within twelve months of the SC certification letter.
- **P.U.(A) 357/2025** — exemption for non-residents on s.4A and para 4(f)
  income received from qualifying Pulau 1 persons **on or before 31 August 2034**,
  expressly disapplying **ss.109B and 109F**. That is a withholding tax carve-out
  most zone comparisons miss entirely.
- **P.U.(A) 358/2025** — RPGT relief for **non-citizen, non-PR individuals**,
  reducing the Schedule 5 Part III charge to an effective **20% in year four**,
  **15% in year five** and **nil from year six**, on an SPA executed
  1 September 2024 to 31 July 2034 and stamped before 1 September 2034.
- **P.U.(A) 359/2025 and 360/2025** — industrial building allowance on capital
  expenditure incurred by **31 December 2034**, and a deduction for business
  relocation cost.
- **P.U.(A) 352/2025 to 356/2025** — stamp duty exemptions and remissions.

The qualifying-person list in those orders is what makes Forest City a financial
zone rather than an industrial one: persons licensed under **s.10 of the
Financial Services Act 2013** or the Islamic equivalent, Capital Markets and
Services Licence holders, recognised market operators under **s.34**, registered
persons under **ss.76 and 76A**, SC-verified single family fund companies,
fintech and insurtech companies with **MSC Malaysia or Malaysia Digital status
verified by MDEC**, and foreign payment system operators approved under **s.11**.
No manufacturer appears anywhere on that list.

What Forest City still lacks is a gazetted **special tax rate for those licensed
institutions**. The 20 September 2024 announcement is referenced in MIDA's own
guideline; the corresponding rate order is not in the gazette. The only Forest
City corporate rate with an instrument behind it is the family office 0%.

## And the corridors?

On tax, the corridors are thinner than their marketing suggests. Only two
corridor instruments could be confirmed against gazetted text, and both are shut.

The **State of Kelantan Special Incentive Scheme**, P.U.(A) 269/2025, gives
**0% for fifteen years of assessment, then 17% for five**, extendable by a
further five, with a companion **15% C-Suite rate** for five years under P.U.(A)
270/2025 — but rule 5(1) closed applications through ECERDC on **31 December
2024**, and the rules were only gazetted on **26 August 2025**. The **ECER
knowledge-worker** rate of 15% under Schedule 1 Part XIV, P.U.(A) 330/2023,
closed on the same date and reaches only employment inside the **Malaysia-China
Kuantan Industrial Park**.

For Iskandar Malaysia, the Northern Corridor, the Sabah Development Corridor and
the Sarawak corridor, **no current gazetted income tax rate instrument was
located**. That is a negative finding against an index current to 8 July 2026,
not an assertion that nothing exists — but it does mean any corridor rate you are
quoted should come with an instrument number before you build a model on it. The
corridors remain real as location decisions; see the
[JS-SEZ guide](/en/business/js-sez-guide),
[Iskandar Malaysia](/en/business/iskandar-malaysia-guide),
[ECER](/en/business/ecer-guide) and [NCER](/en/business/ncer-guide) for that side
of it.

## Common mistakes

**Applying to MIDA for a Forest City financial services incentive.** Forest City
qualifying persons are verified by the **Securities Commission**, and the family
office application under rule 5 of P.U.(A) 350/2025 goes to the Minister
*through* the SC. MIDA's package stops at Flagship G.

**Quoting the JS-SEZ 5% without the capital threshold.** The 15-year tenure
requires capital investment excluding land **above RM1 billion**. Between RM500
million and RM1 billion the same 5% runs for **10 years**. Below RM500 million,
the manufacturing scheme does not apply at all.

**Treating an approval letter as a claimable relief.** For JS-SEZ, the Global
Services Hub and the New Incentive Framework alike, the guideline says the rate
is still *to be provided* through subsidiary legislation, and none has been
gazetted.

**Assuming a zone rate beats the Pillar Two floor.** Both guidelines flag the
Domestic Top-Up Tax themselves. For a group above EUR 750 million, a 5% zone rate
is not a 5% outcome.

**Treating the Kelantan gazette date as an opening.** The rules arrived eight
months after applications closed. The AGC index will not tell you — the status
field still reads PRINCIPAL, which is an instrument type and not an in-force
flag.

**Assuming Budget 2026 moved something.** It did not. The *Langkah Cukai*
appendix carries no measure on the special economic zones, Forest City or the
services hub, and it is the document that states position against proposal
explicitly.

## What's next

Decide the regulator before the rate. If the activity is licensed financial
services, capital markets or a family office, the route is the Securities
Commission and Pulau 1. If it is manufacturing, logistics, tourism or a services
hub, the route is MIDA and Flagships A to G, through
`investmalaysia.mida.gov.my` and the Invest Malaysia Facilitation Centre Johor.

Then check three dates against your own project plan: the application must land
**before your first sales invoice**; the determination application is due within
**24 months** for a rate or **36 months** for an ITA; and the Annual Compliance
Report is due **within seven months** after each year of assessment. Missing the
first two ends the incentive outright. Missing the third costs you a year.

Finally, ask MIDA or the SC in writing which instrument your relief will be
issued under, and keep the reply on file. For the incentive landscape outside the
zones, see the [tax incentives directory](/en/taxation/tax-incentives-directory)
and [the New Incentive Framework](/en/taxation/new-incentive-framework).

## Sources

- Guidelines for Johor-Singapore Special Economic Zone (JS-SEZ) Tax Incentive Package, V2 — https://www.mida.gov.my/wp-content/uploads/2025/04/Guideline-JSSEZ-V2.pdf (MIDA)
- JS-SEZ Tax Incentives Package — snapshot — https://www.mida.gov.my/wp-content/uploads/2025/02/03.02.25_Snapshot-JSSEZ-for-Publication_MIDA_IRDA_.pdf (MIDA and IRDA)
- Guidelines for Global Services Hub (GS-Hub) Tax Incentive — https://www.mida.gov.my/wp-content/uploads/2024/12/GS-Hub_Guideline_MIDA.pdf (MIDA)
- 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.%20(A)%20350_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.%20(A)%20358_2025.pdf (Attorney General's Chambers)
- Income Tax (State of Kelantan Special Incentive Scheme) Rules 2025, P.U.(A) 269/2025 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/3038524/PUA%20269.pdf (Attorney General's Chambers)
- Income Tax (Determination of Knowledge Worker and Qualifying Activity in the East Coast Economic Region) Rules 2023, P.U.(A) 330/2023 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputp/1880693/PUA330_2023.pdf (Attorney General's Chambers)
- Langkah Cukai Belanjawan 2026 — https://belanjawan.mof.gov.my/pdf/belanjawan2026/ucapan/lampiran-cukai.pdf (Ministry of Finance)

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