(Tax Update) Capital Gain Tax: Unresolved Questions

(Tax Update) Capital Gain Tax: Unresolved Questions

Effective from 1st January 2024, company, limited liability partnership, trust body, and co-operative society which receives gains or profits from the disposal of capital assets consisting of:

  1. share of a company incorporated in Malaysia not listed on the stock exchange; or

  2. share of a controlled company incorporated outside Malaysia that owns real property situated in Malaysia or shares of another controlled company or both,

are subject to Capital Gains Tax (CGT) under the Income Tax Act 1967.

Exemption Period

Any disposal for the period of 1st January 2024 to 29th February 2024 is exempted from Capital Gains Tax under The Income Tax (Exemption) (No. 7) Order 2023.

The taxpayer is not required to submit a tax return for the disposal of that capital asset within the above period.

CGT Filing and Tax Payment Deadline

IRBM has published Capital Gains Tax Return Form (CGTRF) Filing Programme on 15 January 2024 with key takeaways is summarised as below :

Taxpayers are to submit CGT tax returns and make tax payments within sixty (60) days of the date of disposal.

For assessments raised under sections 91, 96A, and subsections 90(3), 101(2) of ITA 1967, the tax / balance of tax shall be paid within 30 days from the date of assessment. Nevertheless, a grace period of 7 days is given.

Taxpayers are required to submit tax returns through e-Filing (e-CKM Form). Kindly visit MyTax portal at https://mytax.hasil.gov.my to access e-CKM Form from 1st March 2024.

Taxpayers shall have a Tax Identification Number (TIN) and Digital Certificate to access e-CKM.

Unresolved Questions

On January 15, 2024, the Inland Revenue Board of Malaysia (IRBM) shared the filing process for the Capital Gains Tax Return Form (CGTRF) but didn't provide further guidance.

With the new Capital Gains Tax (CGT) beginning on March 1, 2024, the lack of clear instructions has left taxpayers and businesses unsure about how to proceed.

  • The Exemption Order does not change the start date for a lower 2% tax option on unlisted shares bought before 2024. If bought between January and February 2024, future sales are taxed at 10%, not 2%. There might be a "tax-free" period due to a technicality, but this wasn't officially announced.

  • Redeemable preference shares' redemption isn't clearly defined as a "disposal" for CGT, suggesting future clarification.

  • The term "real property" lacks a clear definition for CGT purposes, and it's unclear how the 75% test for foreign company disposals applies over time.

  • Exemptions mentioned previously might be added later. For foreign-sourced gains to be tax-exempt, companies must meet certain economic substance requirements in Malaysia.

  • It's uncertain how losses from domestic and foreign asset disposals are treated for tax purposes, indicating a need for further guidance.

Past Blog on CGT

Read our past blog on CGT

Visit Us

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

#Thk

#KTP




taxKtp Ktptax budget, tax budget 2024, capital gain tax