Malaysia: Direct and indirect tax changes in Finance Act (No. 2) 2023
Finance (No. 2) Act 2023 gazetted on 29 December 2023
Finance (No. 2) Act 2023 was gazetted on 29 December 2023, with no material difference from Finance (No. 2) Bill 2023.
The Act include various direct and indirect tax changes and became effective 30 December 2023.
In particular, the Act provides that effective 1 January 2024, capital gains tax (CGT) will be imposed on gains made by companies, limited liability partnerships, trust bodies, and co-operative societies from disposal of:
- Shares in companies incorporated in Malaysia not listed on the stock exchange
- Shares under the new Section 15C (i.e., shares of a controlled company incorporated outside Malaysia which owns real property situated in Malaysia or shares of another controlled company, subject to meeting the 75% threshold conditions)
- Capital assets situated outside Malaysia, upon remittance into Malaysia
Income Tax (Exemption) (No. 7) Order 2023 provides a two-month exemption for disposals made on or after 1 January 2024 to 29 February 2024 of shares in companies incorporated in Malaysia not listed on the stock exchange. However, the exemption does not apply to gains or profits of shares chargeable to tax as business income under Section 4(a) of the Income Tax Act 1967.
Read a January 2024 report prepared by the KPMG member firm in Malaysia