2024/2025 Malaysian Tax Booklet

1. Real Property Gains Tax

Scope

Every person whether resident or not resident is chargeable to Real Property Gains Tax (RPGT) on gains arising from disposal of real property, including shares in a real property company (RPC). Real property is defined as any land situated in Malaysia and any interest, option or other right in or over such land.

RPC is a controlled company where its total tangible assets consist of 75% or more in real property and / or shares in another RPC. A controlled company is a company owned by not more than 50 members and controlled by not more than 5 persons. With the introduction of capital gains tax (CGT) (refer to Tax on Capital Gains), the disposal of shares in an RPC by persons subject to CGT from 1 January 2024 will be subject to CGT instead of RPGT.

Disposal is generally triggered upon transfer of ownership from one person to another whether by way of sale, conveyance, assignment, settlement, alienation, etc. 

Returns and assessment

For each disposal, both the disposer and acquirer are required to submit RPGT returns respectively within 60 days from the date of disposal. The Director General of Inland Revenue (DGIR) shall raise an assessment based on the RPGT returns. W.e.f 1 January 2025, the self-assessment system will be implemented for RPGT and the returns furnished will be deemed as assessments raised by the DGIR.

Withholding by acquirer

Where the purchase consideration consists wholly or partly of cash, the acquirer is required to withhold the lower of the entire cash consideration or:

• 7% of the total acquisition price where the disposer is not a citizen and not a permanent resident, or an executor of estate of a deceased person who is not a citizen and not a permanent resident, or a company not incorporated in Malaysia
• 5% of the total acquisition price where the disposer is a company incorporated in Malaysia, or a trustee of a trust, or a body of person registered under any written law in Malaysia and the disposal is made within 3 years of acquisition
• 3% of the total acquisition price in all other cases. 

That amount, whether or not withheld by the acquirer, is to be remitted to the DGIR within 60 days from the date of disposal. The amount remitted to the DGIR is to be applied against the RPGT payable by the disposer. 

Exemptions

The following are some examples of exemptions from RPGT:

• an amount of RM10,000 or 10% of the chargeable gain, whichever is greater, accruing to an individual.
• gain accruing to an individual who is a citizen or a permanent resident in respect of the disposal of one private residence.
• disposal of assets in connection with securitisation of assets.
• disposal of assets to Real Estate Investment Trusts and Property Trust Funds.

The following are some examples of transactions where the disposal price is deemed to be equal to its acquisition price:

• devolution of assets of a deceased individual.
• transfer of assets (owned by a citizen) between spouses.
• gifts made to the Government, State Government, local authority or approved charity.
• disposal of asset as a result of compulsory acquisition under any law.
• disposal of chargeable asset pursuant to a scheme of financing approved by Bank Negara Malaysia, Labuan Financial Services Authority, Malaysian Co-operative Societies Commission or the Securities Commission as a scheme which is in accordance with the principles of Syariah.

The following are some examples of transactions where the disposer is treated to have received no gain and suffered no loss:

• transfer of real property with prior approval of the DGIR by a company to companies in the same group to bring about greater efficiency in operation for a consideration consisting of not less than 75% in shares.
• transfer by way of gift between husband and wife, parent and child, or grandparent and grandchild, provided the donor is a citizen.
• transfer between former spouses pursuant to a court order in consequence of a dissolution / annulment of marriage, where the transferor is a citizen.

2. Tax on capital gains

CGT is imposed, from 1 January 2024, on the gains from disposal of capital assets by companies, LLPs, co-operatives and trust bodies as follows

a) Capital asset situated in Malaysia

• Shares in unlisted companies incorporated in Malaysia** 
• Shares in foreign incorporated company deriving value (directly or indirectly) from real property in Malaysia**

^{**Exemption is given for disposals made on or after 1 January 2024 to 29 February 2024, and in the case of resident unit trust (which is not a Real Estate Investment Trust or Property Trust Fund listed on Bursa Malaysia) for disposals made on or after 1 January 2024 to 31 December 2028, where the gains are not treated as business income.}

However, subject to conditions, CGT exemption will be given for disposal of shares relating to:

• Initial Public Offering approved by Securities Commission or Bursa Malaysia, where applicable

• Restructuring of shares within the same group 

for disposals made from 1 March 2024 to 31 December 2028, subject to approvals by the authorities.

It is also proposed that CGT exemption be given for disposal of shares relating to Venture capital companies.

b) Gains from disposal of all types of capital assets situated outside Malaysia, remitted into Malaysia

Based on prevailing income tax rate of the taxpayer, for example:

• Companies, LLPs and trust bodies: 24% 

• Co-operatives: 0% - 24% (scaled rates)

However, gains remitted into Malaysia from 1 January 2024 to 31 December 2026 are eligible for CGT exemption subject to meeting economic substance requirements.

Individuals are not subject to CGT.