Real Property Gain Tax of Malayisa
Every person whether or not resident is chargeable to RPGT on gains arising from disposal of real property, including shares in a real property company (RPC).
Real property is defined as any land situated in Malaysia and any interest, option or other right in or over such land.
RPC is essentially a controlled company where its total tangible assets consists of 75% or more in real property and/or shares in another RPC.
A controlled company is essentially a company owned by not more than 50 members and controlled by not more than 5 persons.
Disposal is generally triggered upon transfer of ownership from one person to another whether by way of sale, conveyance, assignment, settlement, alienation, etc.
Returns and assessment
For each disposal, both the disposer and acquirer are required to submit RPGT return respectively within 60 days from the date of disposal.
The DGIR shall raise an assessment based on the RPGT returns.
Date of disposal
The date of disposal is taken as the date of the written agreement of the disposal. In the absence of a written agreement, the date shall be taken as the earlier of full payment of the purchase consideration or the date when all things which are necessary for the transfer of ownership of the real property under any written law has been done. Where the disposal is subject to approval from the Government or State Government, the date of disposal is the date of such approval or if the approval is conditional, the date when the last condition is satisfied.
Withholding by acquirer
Where the purchase consideration consists wholly or partly of cash, the acquirer is required to withhold the lower of the entire cash consideration or:
- 7% of the total acquisition price where the disposer is not a citizen and not a permanent resident, or executor of estate of a deceased person who is not a citizen and not a permanent resident, or not a company incorporated in Malaysia
- 5% of the total acquisition price where the disposer is a company incorporated in Malaysia, or a trustee of a trust, or a body of person registered under any written law in Malaysia and the disposal is made within 3 years of acquisition (w.e.f 1 January 2022)
- 3% of the total acquisition price in all other cases.
That amount, whether or not withheld by the acquirer, is to be remitted to the DGIR within 60 days from the date of disposal. The amount remitted to the DGIR is to be applied against RPGT payable by the disposer.
Payment by disposer
The disposer is required to settle the balance of RPGT payable within 30 days from the date of the notice of assessment.
Exemptions
The following are some examples of exemptions from RPGT:
- an amount of RM10,000 or 10% of the chargeable gain, whichever is greater, accruing to an individual.
- gain accruing to an individual who is a citizen or a permanent resident in respect of the disposal of one private residence.
- disposal of assets in connection with securitisation of assets.
- disposal of assets to REITs and Property Trust Funds.
- disposal of low cost, medium low and affordable residential homes of RM200,000 and below, in the 6th and subsequent years.
- disposal of residential properties by Malaysian citizens during the period 1 June 2020 to 31 December 2021 (limited to 3 units per individual).
The following are some examples of transactions where the disposal price is deemed to be equal to its acquisition price:
- devolution of assets of a deceased individual.
- transfer of assets (owned by a citizen) between spouses.
- gifts made to the Government, State Government, local authority or approved charity.
- disposal of asset as a result of compulsory acquisition under any law.
- disposal of chargeable asset pursuant to a scheme of financing approved by the Central Bank of Malaysia, Labuan FSA, Malaysian Co-operative Societies Commission or the Securities Commission as a scheme which is in accordance with the principles of Syariah.
The following are some examples of transactions where the disposer is treated to have received no gain and suffered no loss from the:
- transfer of real property with prior approval of the DGIR by a company to companies in its same group to bring about greater efficiency in operation for a consideration consisting of not less than 75% in shares.
- transfer by way of gift between husband and wife, parent and child, or grandparent and grandchild, provided the donor is a citizen.