malaysia has enacted a number of tax incentives to encourage particular forms of economic activity. many tax incentives simply remove part or of the burden of the tax from business transactions. in malaysia, the corporate tax rate is now capped at 25%. nevertheless, a company eligible for a certain tax incentive might only pay an average effective tax rate of 7.5%, with only 30% of the company's profit being subjected to tax. this is a good example of how the companies benefit through the incentives provided by the malaysian government.