Real Property Company (RPC) Malaysia

Real Property Company (RPC) Malaysia

Real Property Company (RPC) Malaysia

Real Property Company (RPC) Malaysia

Real property is defined as any land situated in Malaysia and any interest, option or other rights in or over such land. RPC is essentially a controlled company where its total tangible assets consist of 75% or more in real property and/or shares in another RPC.

IRB Hot List 2021 RPC

Many are totally unaware that if they dispose of shares in a real property company they will be subjected to both Stamp Duty and RPGT.

The taxation of a Real Property Company (RPC shares) is not as easy as you think. Please consult your entrusted approved tax agent or licensed company secretarial on RPC matters.

There is a catch...which has undisputedly become IRB Hot List 2021.

A real story from our client on RPC :

Client: Hi! KTP, I am thinking to quit my business and dispose my shares to another partner, but recently I saw a lot of news on selling shares is subject to RPGT. I am not very sure whether this applies to me.

Auditor: Hi Mr Tan, it is very simple. To confirm, let me just ask you a few questions.

Auditor: First question, your company have how many shareholders and is controlled by how many people?

Client: Our company got 5 shareholders including me, all of them are directors as well.

Auditor: Next question, what is the percentage of your property value over total asset? including stocks, machinery and other asset.

Client: Ermmm.. I think around 40%, we bought the factory 10 years ago.

Auditor: No no no, it has to be based on market value as of today.

Client: I see. I use my neighbour price can? Same size factory. I think around 88%.

Auditor: Ermm.. Mr Tan, bad news for you. So, your company is considered a Real Property Company (RPC) and when you sell shares, the gain from the disposal will be subject to RPGT!

Client: Aiyooo broke already! *#$^#^*%#^&@

Key tax summaries of RPC

• A controlled company having ≤ 50 shareholders and controlled by ≤ 5 persons

• Owned property or RPC shares in another RPC or both

• Value of the property or shares in other RPC or both > 75% of the value of its total tangible assets

Effect on RPC shares due to changes in RPC status

A real property company is no longer a RPC when the defined value becomes less than 75% of the value of its total tangible assets due to the disposal of the property or shares in another RPC or both.

The effect of the company's shares are:

RPC shares remain as chargeable assets in the hands of shareholders even though at the time of disposal of the shares by the shareholder the company is no longer a RPC.

Acquisition of shares during the period when a company is not a RPC, is not an acquisition of chargeable assets (non-RPC shares) until the company becomes a RPC.

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