(Tax Update) Capital Gain Tax: Guidelines on Capital Gains Tax for Unlisted Shares

The Inland Revenue Board of Malaysia has issued the Guidelines on Capital Gains Tax for Unlisted Shares dated 1 March 2024 on its website.

The CGT Guidelines explain the CGT treatment on the gains or profits from the disposal of:

a.   Shares of a company incorporated in Malaysia not listed on the stock exchange; and

b.   Shares of a controlled company incorporated outside Malaysia that owns real property situated

in Malaysia or shares of another controlled company or both.

Key Summaries of the Exemption Order

• Introduction of CGT under the Income Tax Act 1967 (ITA) effective from January 1, 2024, with implementation starting March 1, 2024.

• CGT applies to profits from the disposal of capital assets, including unlisted shares of companies incorporated in Malaysia and foreign-controlled companies owning property in Malaysia or shares in other controlled companies.

• The guideline provides explanations for terms such as \'\'capital asset,\'\' \'\'consideration,\'\' \'\'disposal,\'\' \'\'stock exchange,\'\' and \'\'shares.\'\'

• Entities liable for CGT include limited liability partnerships, trusts, cooperatives, including Labuan entities subject to tax under ITA.

• CGT imposition based on the year of assessment in which the disposal transaction occurs.

• Methodology for determining the disposal and acquisition dates and values of capital assets.

• Calculation of profits or gains from the disposal of capital assets and the handling of unabsorbed losses.

• Transfer of capital assets to stock in trade and disposal of shares in relevant companies as per Section 15C of the ITA.

• Claiming foreign tax credits, the CGT rate, and reporting requirements.

• Exemptions and conditions under which CGT may not apply or be calculated differently.

Past Blog on CGT

Read our past blog on CGT

• Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23

• Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24

• Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24

• Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24

• Capital Gain Tax: Unresolved Questions https://www.ktp.com.my/blog/capital-gain-tax-unresolved-questions/23feb24

• Capital Gain Tax : Gains From Disposal Of Capital Asset Arising From Outside Malaysia Received in Malaysia https://www.ktp.com.my/blog/capital-gain-tax-exemption-foreign-source-income/05march24

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