Capital Gains Tax – What do you need to consider? [Updated on 6 March 2024]

With the emergence of Capital Gains Tax (“CGT”) in Malaysia, companies, limited liability partnerships, co-operative societies and trust bodies (whether incorporated in or outside Malaysia) will be impacted.  Capital assets situated in and outside Malaysia are in-scope, with certain exemptions given / proposed.

Subsequent to our Tax Whiz issued in end of January 2024, there are further developments on CGT as follows:

1) Income Tax (Exemption) (No. 2) Order 2024 has been gazetted to provide 2 months exemption to CGT-in scope taxpayers on gains from the disposal of Section 15C shares made during the period from 1 January 2024 until 29 February 2024.

2) The Malaysian Inland Revenue Board (“MIRB”) has released its Guidelines on CGT in Relation to Unlisted Shares (“CGT Guidelines”) dated 1 March 2024 on its official portal.

3) Income Tax (Exemption) (No. 3) Order 2024 has been gazetted to provide exemption to qualifying CGT-in scope taxpayers on gains from the disposal of capital asset situated outside Malaysia (excluding the intellectual property rights) which is received in Malaysia, during the period from 1 January 2024 until 31 December 2026.  The qualifying person shall comply with the conditions imposed as specified in the guidelines to be issued by the Director General of the MIRB, which shall include the economic substance requirements.  A person who is carrying on the business of banking, insurance, air transport and sea transport is not eligible for the said exemption.

In this respect, we have updated our Tax Whiz, in red font, to reflect the Exemption Orders as well as the notable points in the MIRB’s CGT Guidelines.

The Exemption Orders, the MIRB’s CGT Guidelines and the updated Tax Whiz can be accessed via the above links.

As part of good tax planning, it is pertinent for taxpayers to plan early in ascertaining the applicability of CGT and its exemptions.  Where the disposal has already taken place, it is important to accurately determine the date of disposal and the amount chargeable to CGT in order to comply with the reporting requirement.

KPMG would be delighted to provide our assistance to you, where required, in:

a) Assessing the impact of CGT and advising on the applicability of CGT exemption(s);

b) Preparing computation on the amount of capital gains chargeable to tax; 

c) Submitting CGT returns; and/or

d) Advising on relevant CGT considerations and strategies relating to your transaction or structure.

Evelyn Lee
Partner - Penang Tax
evewflee@kpmg.com.my
+603 7721 2399

Crystal Chuah Yoke Chin
Associate Director - Ipoh Tax
ycchuah@kpmg.com.my
+603 7721 2714

Regina Lau
Partner - Kuching & Miri Tax
reglau@kpmg.com.my
+603 7721 2188

Titus Tseu
Executive Director - Kota Kinabalu Tax
titustseu@kpmg.com.my
+603 7721 2822

Ng Fie Lih
Partner - Johor Tax
flng@kpmg.com.my
+603 7721 2514