In line with the Budget for 2024, Malaysia is poised for significant changes in its taxation landscape, particularly in the realm of Capital Gains Tax (CGT). The proposed amendments are expected to impact various sectors and types of taxpayers.

Here’s a summary of the key takeaways:

1. Types of Capital Asset
1.1 Capital assets situated in Malaysia :
• Unlisted shares of companies Incorporated in Malaysia
• Shares in foreign incorporated companies deriving value from real property in Malaysia

1.2 All types of capital assets situated outside Malaysia

2. Eligible Taxpayers
There are 4 categories listed below:
• Company
• Limited Liability Partnership (LLP)
• Cooperative
• Trust Body (including unit trusts)

3. Effective date
1 January 2024

The Ministry of Finance (MOF) has clarified the effective date of capital gains tax (CGT) imposition:

• CGT is to be imposed with effect from 1 January 2024 as indicated in the Finance Bill (No. 2) 2023.

• Notwithstanding the above, the imposition of CGT on gains or profits from disposal of local companies’ unlisted shares will commence on 1 March 2024. This will be implemented through subsidiary legislation.

4. Tax Rate
4.1 Shares acquisition date :
• Before 1 March 2024 * : The taxpayers may choose either
• 10% on the net gain of the disposal of shares; or
• 2% on the gross sales value.

• From 1 March 2024 * : 10% on the net gain of the disposal of shares ;

4.2 All types of capital assets situated outside Malaysia are based on the prevailing income tax rate of the taxpayer.
• Companies, LLP’s and trust bodies: 24%
• Co-operative : 0% to 24%

*See clarification from MOF from Effective date under Point #3 as above

5. Exemptions
Transactions exempted from CGT
• Initial Public Offering (IPO) approved by Bursa Malaysia; and
• Restructuring of shares within the same group.
• Venture capital companies
• Gains from disposal of foreign capital assets from outside Malaysia which meet economic substance requirement (ESR)
• Individual

6. Date of Disposal and Acquisition
There are 2 points in time to determine the date of disposal and acquisition
• With a written agreement: Date of the agreement
• Without a written agreement: Date of completion of the disposal

To be continued in Part 2 hashtag#cgt