DESAC is MIDA’s tax incentive for data centres. New companies can claim an investment tax allowance of 100% (Tier 1) or 60% (Tier 2) of qualifying capital expenditure, set against up to 100% of statutory income, or instead a special tax rate of 10% (Tier 1) or 15% (Tier 2); existing companies get 60% or 30%, against up to 70% (MIDA).
Applications are open from 1 January 2022 to 31 December 2027 and must be made before the first sales invoice (MIDA). Applicants are the data centres MITI’s PUE, WUE and CUE design targets apply to (MITI).
- 100%
- Tier 1 investment tax allowance, new companies (MIDA)
- 10%
- Tier 1 special tax rate, the alternative (MIDA)
- RM1bn
- Tier 1 capital expenditure, new companies (MIDA)
- 31 Dec 2027
- Application deadline (MIDA)
What does DESAC give, for new and existing companies?
| New companies | Existing companies | |
|---|---|---|
| Investment tax allowance | 100% (Tier 1) or 60% (Tier 2) of qualifying capex, against up to 100% of statutory income | 60% (Tier 1) or 30% (Tier 2), against up to 70% of statutory income |
| Duration | 5 or 10 years | 5 years |
| Alternative | Special tax rate of 10% (Tier 1) or 15% (Tier 2), excluding IP income | Not available |
| Tier 1 capex | RM1bn | RM300m over 5 years |
Source: MIDA DESAC guideline (PDF).
Who is eligible, and what are the conditions?
- Paid-up capital of at least RM2.5m.
- At least 50% Malaysian staff earning RM5,000 or more a month.
- At least one green technology.
- At least two local vendor development programmes.
- Industry 4.0 elements.
Applications run from 1 January 2022 to 31 December 2027 and must come before the first sales invoice (MIDA).
Is DESAC tied to PUE, WUE and CUE?
Yes, through MITI’s guideline: its proposed design targets (PUE 1.4, 1.6 or 1.7 by size, WUE 2.2 m³/MWh, CUE on the grid factor) are set for DESAC applicants (MITI). See PUE, WUE and CUE.
Does the JS-SEZ 5% tax rate cover data centres?
No. The JS-SEZ 5% rate covers AI and quantum supply-chain manufacturing and other sectors, not data centres; DESAC is the incentive built for data centres. See the guide.
Conflicting figures
Answers often give one DESAC allowance rate for everyone. The rate depends on whether the company is new or existing, and on its tier.
| Rate quoted | Who it actually applies to |
|---|---|
| 100% | New companies, Tier 1 only |
| 60% | New companies at Tier 2, or existing companies at Tier 1 |
| 30% | Existing companies, Tier 2 |
| 10% or 15% tax rate | New companies only, as an alternative to the allowance |
What is not public
We could not confirm these from a published source as of 10 November 2026. Do not assume them:
- Which data centres have been granted DESAC
- The value of DESAC granted to date
Croutons Research publishes open data and methods on AI data centres in Malaysia. See the open method for measuring AI work per megawatt.
Sources
- MITI, Guidelines for Sustainable Development of Data Centres (PDF)
- MIDA, DESAC guideline (PDF, Dec 2024)
Last checked 10 November 2026