Boss, your company shares may say RM1.
But LHDN may ask:
“Actually worth how much?”

This is where many SME bosses may suddenly sit up straight.
For many years, share transfer at RM1 was very common in Malaysia.

Operating Sdn Bhd transfer subsidiary shares to holding Sdn Bhd.
Sister company transfer shares to family holding company.
Group restructuring done quietly inside the family.
Company secretary prepare the documents.

The form shows RM1.
Everyone signs.
Done.
Nobody thinks too much.

Because in the boss’s mind, this is not a real sale.
“Same group only mah.”
“All my own company.”
“No outsider also.”
“No money really come in.”
“Just paperwork only.”

Correct. This was how many SMEs did it for many years.

But from 1 March 2024, with Capital Gains Tax, CGT, the story is no longer so simple.

Let me share one Uncle Lim story.
Uncle Lim started his business from very small.
One small office.
A few staff. Boss, wife, family members, everyone helped.
Slowly, the business grew. More customers. More assets. More profit. More value.

Uncle Lim’s group structure also grew.
There is one operating Uncle Lim Sdn Bhd, doing the real business.

Last year, Uncle Lim decided to do some tidy up.
The operating Sdn Bhd transferred its shares in the new Sdn Bhd under uncle Lim’s children.

The price written in the document was RM1.
At that time, nobody worried.
To Uncle Lim, it was just internal arrangement.
Company secretary said can do.
So he did.

Then the tax question came.
Can it really be treated as RM1?
Or should the market value at that time be considered?

This is where the scary part begins.
The scary part is not the RM1 form.
The scary part is that the disposer is a Sdn Bhd.

And CGT now applies.
Under Section 65E(8) of the Income Tax Act 1967, when capital assets are disposed of between connected persons, the consideration is deemed to be the market value at the time of disposal.

Not the RM1 written in the form.
Market value.

LHDN look at market value.
They may ask:
How did you arrive at RM1?
Was there any valuation?
Was the transfer done at arm’s length?
What was the company actually worth at the date of disposal?
Where is the working paper?

For a Sdn Bhd disposer, this is no longer just paperwork.

Many SME bosses who did RM1 transfers between their group companies were not trying to avoid tax.

They were just following old practice.
It was convenient.
It was cheap.
It was normal.

But tax law has changed.
CGT now applies to disposals of unlisted shares by a company, LLP, trust body or co-operative society, with effect from 1 March 2024.

If the disposer is an individual, CGT does not catch you. (Stamp duty is another story, talk about that another day.)

If the disposer is a Sdn Bhd, CGT applies. And for connected party transfers, the RM1 figure is not the end of the story.

There is some good news.
Group restructuring between Malaysian resident companies in the same group may qualify for exemption under the relevant Exemption Order (P.U.(A) 289/2024), subject to conditions.

But the conditions must be met. And documented. Properly.
Not just “company secretary file inside”.

If you are an SME boss with a group structure, maybe ask yourself :
Did any of your Sdn Bhd transfer shares at RM1 after 1 March 2024?
Was it between group companies or connected parties?
Do we have proper valuation support?
Did we check the intra-group exemption?
Are we planning to sell, restructure, or pass the business to the next generation?

Then one day, when LHDN review, the issue wakes up.
By then, everyone starts looking for old documents.
Old board resolution.
Old company secretary file.
Old WhatsApp message.
Old memory.

Also read more in the KTP blog.
https://www.ktp.com.my/blog/capital-gain-tax-malaysia-guideline/28may2026