💼 Part 2 – Malaysia’s Capital Gains Tax (CGT): A New Era for Investment and Corporate Transactions
Introduction
Following the implementation of Capital Gains Tax (CGT) in 2024, Malaysia has entered a new chapter in tax policy — expanding beyond real estate to cover gains from shares and investments. The CGT framework aligns Malaysia with OECD standards and improves equity in the tax system.
This article draws on insights from Harvindar Singh’s presentation on 23 September 2025 to explain the CGT structure, exemptions, and its impact on businesses.
Scope of CGT
CGT applies to disposals of capital assets, including:
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Unlisted shares of Malaysian companies, and
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Foreign capital assets held by Malaysian entities.
It does not apply to individual taxpayers — only to companies, LLPs, co-operatives, and trust bodies.
Computation of Tax
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For shares acquired before 1 January 2024:
Taxpayer may choose 10 % of net gain or 2 % of gross disposal value. -
For shares acquired on or after 1 January 2024:
Tax is based on 10 % of net gain. -
Payment is due within 60 days from disposal date.
CGT Exemptions and Incentives
1. Initial Public Offering (IPO) Relief (2024–2028)
Gains arising from restructuring before listing on the Main, ACE, or LEAP Market are exempt from CGT, to encourage capital market development.
2. Intragroup Restructuring Exemption (2024–2028)
Share transfers within a group (≥ 75 % ownership link) qualify for relief if the transaction is for bona fide business reorganisation.
3. Economic Substance Requirement
To enjoy foreign CGT exemption, companies must prove real economic presence in Malaysia — adequate staff, office premises, and operating expenditure.
Compliance and Filing
Taxpayers must report CGT through a self-assessment system.
Records must be kept for seven years and retained for audit verification.
Failure to file or under-declaration may attract penalties under the Income Tax Act.
Business Implications
CGT affects how companies plan their:
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Mergers and Acquisitions: Share transfers and asset restructuring now trigger CGT considerations.
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Group Financing and Valuation: Fair value of shares must be well-documented.
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Cross-Border Holdings: Foreign disposals require substance and documentation to qualify for relief.
While compliance demands more reporting, CGT enhances Malaysia’s credibility as a modern, transparent investment hub.
Conclusion
Malaysia’s new Capital Gains Tax signals a shift towards a more comprehensive tax system that balances fiscal integrity with economic growth.
By introducing structured exemptions and encouraging real economic activity, the CGT regime supports both business efficiency and investment sustainability.
As businesses adapt to this framework, strategic tax planning and strong governance will be essential to maximise benefits and remain compliant in the post-2024 era.
Read Also:
Understanding Malaysia’s Real Property Gains Tax (RPGT) – Part 1
Disclaimer: This article is for informational purposes only and does not constitute any professional advice. Feel free to contact us to consult with our professional advisors team for personalized advice and guidance.
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