Real Property Gains Tax (RPGT)
A. DETERMINATION OF ACQUISITION PRICE FOR DISPOSAL OF REAL PROPERTY ACQUIRED PRIOR TO 1 JANUARY 2013
Existing Legislation
Effective from 1 January 2019, in the case of a disposal of real property acquired prior to 1 January 2000, the acquisition price of such real property for the purpose of determining the chargeable gain subject to Real Property Gains Tax shall be the market value of the real property as at 1 January 2000. The disposer must be a Malaysian citizen or permanent resident.
Proposed Legislation
It is proposed that the determination of market value as of 1 January 2000 as the acquisition price for the disposal of real properties acquired before year 2000 be amended to the market value as of 1 January 2013 as the acquisition price for the disposal of real properties acquired prior to year 2013 for the purpose of Real Property Gains Tax computation.
Reference
Schedule 2 and 3 of the Real Property Gains Tax Act 1976.
Effective Date
For the disposal of real properties from 12 October 2019.
Likely Tax effects and Implications
In consideration of the public’s view, the Government has introduced this measure to reduce the Real Property Gains Tax exposure on the disposal of real properties by Malaysian citizens and permanent residents after 5 years from the date of acquisition.
B. RETENTION SUM BY ACQUIRED FOR DISPOSAL OF CHARGEABLE ASSET BY A COMPANY NOT INCORPORATED IN MALAYSIA
Existing Legislation
Presently, where the disposer of chargeable assets (i.e. real property or shares in a real property company) is not a Malaysian citizen and not a permanent resident, and the consideration for the disposal consists wholly or partly of money, the acquirer is required to withhold either the whole of that money or a sum not exceeding 7% of the total value of the consideration, whichever is lower, and remit the sum withheld to the Inland Revenue Board (IRB) within 60 days after the date of disposal.
Proposed Legislation
It is proposed that the above requirement be extended to the disposal of a chargeable asset by a company not incorporated in Malaysia.
Reference
Section 21B (1A) of the Real Property Gains Tax Act 1976.
Effective Date
Upon coming into operation of the Finance Act 2019.
Likely Tax Effects and Implications
This amendment would require the acquirer to withhold and remit a sum not exceeding 7% of the consideration relating to the disposal of a chargeable asset by a company not incorporated in Malaysia.
C. CHANGES IN REAL PROPERTY GAINS TAX RATES APPLICABLE TO DISPOSAL OF CHARGEABLE ASSET BY A COMPANY NOT INCORPORATED IN MALAYSIA AND A TRUSTEE OF A TRUST
Existing Legislation
Presently, gains from the disposal of chargeable assets (i.e. real property or shares in a real property company) are taxed under the Real Property Gains Tax Act 1976. The current effective Real Property Gains Tax rates range from 5% to 30%, depending on who the disposer is and the holding period of the chargeable asset, and they are as follows:
| Date of Disposal | Real Property Gains Tax Rates | ||
| Companies | Individual (Citizen / Permanent Resident) | Individual (Non-Citizen / Non-Permanent Resident) | |
| Within 3 years from date of acquisition | 30% | 30% | 30% |
| In the 4th year | 20% | 20% | 30% |
| In the 5th year | 15% | 15% | 30% |
| In the 6th year and subsequent years | 10% | 5% | 10% |
Proposed Legislation
It is proposed that the Real Property Gains Tax rates affecting the disposal of chargeable assets by a company not incorporated in Malaysia and a trustee of a trust be revised as follows:
| Date of Disposal | Real Property Gains Tax Rates | ||
| Companies Incorporated in Malaysia or a Trustee of a trust | Individual (Citizen / Permanent Resident) | Individual (Non-Citizen / Non-Permanent Resident) or a Company Not Incorporated in Malaysia | |
| Within 3 years from date of acquisition | 30% | 30% | 30% |
| In the 4th year | 20% | 20% | 30% |
| In the 5th year | 15% | 15% | 30% |
| In the 6th year and subsequent years | 10% | 5% | 10% |
Reference
Part II AND III of Schedule 5 of the Real Property Gains Tax Act 1976.
Effective Date
Upon coming into operation of the Finance Act 2019.
Likely Tax Effects and Implications
This amendment seeks to change the Real Property Gains Tax rates applicable to gains on disposal of chargeable assets by a company not incorporated in Malaysia and a trustee of a trust.
