Every person whether or not resident is chargeable to Real Property Gains Tax (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 consist 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. With the introduction of capital gains tax (CGT) (refer to Tax on Capital Gains), the disposal of shares in an RPC by persons subject to CGT from 1 January 2024* will be subject to CGT instead of RPGT.
*Per Finance (No. 2) Bill 2023 as tabled in Parliament on 7 November 2023.
Disposal is generally triggered upon transfer of ownership from one person to another whether by way of sale, conveyance, assignment, settlement, alienation, etc.
Disposal
RPGT rates
Companies / Trustee 1 / Society 3 (%)
Individuals # (%)
Individuals 2 , Executor of deceased estate 2 , Companies 2 (%)
In the 4 th year
In the 5 th year
In the 6 th and subsequent years
# Citizens and permanent residents
1 – Companies incorporated in Malaysia or a trustee of a trust
2 – Non-citizens and non-permanent residents and companies not incorporated in Malaysia
3 - Society registered under the Societies Act 1966 and body of persons registered under any written law in Malaysia
For each disposal, both the disposer and acquirer are required to submit RPGT returns respectively within 60 days from the date of disposal. The Director General of Inland Revenue (DGIR) shall raise an assessment based on the RPGT returns. W.e.f 1 January 2025, the self-assessment system will be implemented for RPGT and the returns furnished will be deemed as assessments raised by the DGIR.
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.
Where the purchase consideration consists wholly or partly of cash, the acquirer is required to withhold the lower of the entire cash consideration or:
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 the RPGT payable by the disposer.
The disposer is required to settle the balance of RPGT payable within 30 days from the date of the notice of assessment.