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  • Tag Archive: Malaysia tax

    1. Malaysia Defers Capital Gains Tax on Unlisted Companies

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      Malaysia Defers Capital Gains Tax – Introduction

      In a significant move, the Malaysian government, through the Finance (No. 2) Act 2023 and the Income Tax (Exemption) (No. 7) Order 2023, has deferred the commencement of capital gains tax on the disposal of shares in unlisted Malaysian companies to March 1, 2024.

      This exemption is effective from 1 January 2024, to 29 February 2024.

      Understanding the Exemption Order

      The Exemption Order offers a temporary reprieve from capital gains tax.

      It applies for companies, limited liability partnerships, trust bodies, and co-operative societies on profits gained from the disposal of unlisted Malaysian company shares within the specified period.

      Critical Points to Note

      Exemption Conditions

      The shares must be disposed of between 1 January 2024, and 29 February 2024 to qualify for the exemption.

      Exceptions

      This order does not apply to disposals where gains are considered business income under the Income Tax Act 1967.

      Capital Gains Tax Commencement

      Following this order, the capital gains tax will commence on 1 March 2024, aligning with the original announcement in the Malaysian Budget 2024.

      Controlled Companies Outside Malaysia

      The imposition of capital gains tax on disposals of shares in controlled companies outside Malaysia (owning real property in Malaysia or shares in another controlled company) still commences on 1 January 2024.

      Real Property Gains Tax Act 1976

      Disposals from 1 January 2024, to 29 February 2024, are not subject to the Real Property Gains Tax Act 1976 or capital gains tax.

      Implications for Stakeholders

      This strategic deferment allows a window for entities to plan and adjust to the impending tax changes.

      Businesses and investors involved in the Malaysian market must be aware of these updates to optimise their tax strategies and compliance.

      Malaysia Defers Capital Gains Tax – Conclusion

      This deferment represents an important transitional period in Malaysia’s tax landscape, especially for stakeholders in unlisted companies.

      It reflects the government’s efforts to streamline tax policies while considering the impact on businesses.

      Final thoughts

      If you have any queries around this article on Malaysia Defers Capital Gains Tax or Malaysian tax matters in general, then please get in touch.

    2. The Secret Private Client Tax Adviser: Malaysia debriefing

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      The meeting takes place in an undisclosed, luxurious, but bustling hotel lobby in Kuala Lumpur.

      Head Tax Native (“TN”):

      Secret Private Client Adviser in Malaysia,  your mission, should you choose to accept it, is to educate us on the practical tax considerations in Malaysia.

      This task requires a delicate balance of expertise and discretion.

      Be warned, should your real identity be revealed during this covert operation, you will be disavowed by Tax Natives and shunned by your fellow private client advisers.

      Do you accept?

      Secret Private Client Adviser in Malaysia (Secret Adviser):

      I accept.

      Tax Natives:

      [sits comfortably in a bustling hotel lobby, opens a notebook] Let’s look at some of the tax considerations for private clients in Malaysia.

      How does one become a tax resident there?

      Secret Adviser:

      [leans forward, adjusts glasses] It’s quite straightforward under the Income Tax Act.

      Since 2004, Malaysia’s taxation is based on territoriality, not residency.

      Essentially, if you derive income from Malaysia, you’re taxable, irrespective of your residency status.

      Receptionist:

      [argues with a guest in the background] “No, sir, the breakfast buffet doesn’t include unlimited lobster!”

      Tax Natives:

      [smiles, then refocuses] What about personal tax rates for residents?

      Secret Adviser:

      [glances at a chart in a folder] For residents, the tax rates are graduated.

      For instance, the first 5,000 ringgit is taxed at 0%, and it scales up to 30% for amounts exceeding 2 million ringgit.

      Non-residents, on the other hand, are taxed at a flat 30% rate on their Malaysian income, regardless of the amount.

      Cleaner:

      [approaches, vacuum in tow] Sorry to disturb, could you lift your feet? [They comply as the diligent cleaner vacuums under the table]

      Tax Natives:

      [chuckles, then continues] I guess Corporate tax seems crucial too. Can you elaborate on that?

      Secret Adviser:

      Certainly. A company managed and controlled in Malaysia is deemed tax resident.

      The general tax rate is 24%, but it’s reduced to 17% on the first 600,000 ringgit for smaller companies.

      [Bellhop walks by, accidentally drops a stack of towels, causing a small commotion.]

      Tax Natives:

      [helps pick up towels] What a lively place! Now, what about the taxation of gifts and inheritances?

      Secret Adviser:

      [nods approvingly] Gifts are usually not taxed.

      However, if the gift is in the form of real property, it’s subject to stamp duty. As for inheritance, Malaysia scrapped the inheritance tax in 1991.

      Tourist:

      [returns, still lost] Is the museum this way?

      Secret Adviser:

      [corrects them with a smile] It’s the other way. And regarding capital gains…

      Tax Natives:

      [glances at the clock] I see we’re running short on time. Your insights have been invaluable. Shall we continue this over lunch?

      Secret Adviser:

      [stands, extends a hand] That would be great. Let’s discuss over some Malaysian cuisine!

      Cleaner:

      [over the noise of the vacuum] Enjoy your meal!

      [They leave the lobby, weaving through the lively chaos of tourists, staff, and the ever-busy cleaner.]

       

      Tapping out

      If you have any queries about this top secret interview on private client tax in Malaysia or Malaysian tax matters in general, then please get in touch