The Inland Revenue Board of Malaysia has announced the Capital Gains Tax (“CGT
”) Return Form (“CGTRF
”) Filing Programme effective from 1 March 2024 through a Media Release
uploaded on the HASiL website on 24 January 2024.
To recap, CGT is imposed under the Income Tax Act 1967 (“Act
”) pursuant to amendments introduced under the Finance (No. 2) Act 2023 with effect from 1 January 2024. CGT applies to companies, limited liability partnerships, trust bodies and co-operative societies that receive gains or profits from the disposal of shares of a company incorporated in Malaysia that is not listed on the stock exchange (“Unlisted Malaysian Company
”), or shares of a controlled company incorporated outside Malaysia which owns real property situated in Malaysia or shares of another controlled company or both (“Non-Malaysian Subject Company
In addition, Labuan entities (Labuan Company, Labuan Limited Liability Partnership, Labuan Foundation and Trust) that elect or are subject to taxation under the Act are also subject to the imposition of CGT.
No Requirement to File CGTRF for Disposals During Exemption Period
The Income Tax (Exemption) (No. 7) Order 2023
[P.U.(A) 410/2023] (“Exemption Order
”) provides a temporary exemption from CGT of gains or profits from the disposal of shares of an Unlisted Malaysian Company made between 1 January 2024 and 29 February 2024 (“Exemption Period
Effectively, the Exemption Order delays the onset of CGT on such disposals to 1 March 2024, in accordance with the announcement in the Malaysian Budget 2024. The CGTRF Filing Programme stipulates that there is no requirement to file the CGTRF for shares disposed during the Exemption Period.
Scope of Exemption Extended?
The Exemption Order does not apply to the disposal of shares of a Non-Malaysian Subject Company. Therefore, in accordance with the Act, CGT would be applicable to gains or profits accruing on the disposal of such shares commencing 1 January 2024.
However, the CGTRF Filing Programme states that gains or profits accruing on the disposal of shares of a Non-Malaysian Subject Company from 1 January 2024 to 29 February 2024 are exempted from CGT.3
The foregoing suggests an expansion of the scope beyond what is specified in the Exemption Order. Based on the Act, the power to exempt any class of persons from tax provisions lies with the Minister of Finance. Therefore, any expansion of the scope of the exemption requires formalisation through an order by the said Minister. If the expansion of the exemption is confirmed and formalised, it would mean a broader range of transactions are exempt from CGT for the period from 1 January 2024 to 29 February 2024. However, until the subsidiary legislation is gazetted, the extended exemption as outlined in the CGTRF Filing Programme remains unofficial
. Entities potentially affected by this extended exemption should stay informed of any legislative updates for clarity and compliance.
CGTRF Filing Programme
Based on the HASiL website, taxpayers are required to submit the CGTRF via e-Filing (e-CKM). The MyTax portal, accessible at https://mytax.hasil.gov.my
serves as the platform for this electronic submission. Similarly, tax agents must submit the CGTRF through the TAeF system version 2.0, accessible via the same portal. The CGTRF and explanatory notes will be available for download from the HASiL portal from 31 January 2024
It is important to note that the responsibility for submitting CGTRF lies with the chargeable person as per sections 66 to 75B of the Act. The appointed representatives of the taxpayer are also responsible for the assessment and payment of tax, as well as for submitting the CGTRF on behalf of the taxpayer.
Supporting worksheets or documents used for calculations need not be submitted with the CGTRF but should be kept for a period of seven years after the end of the year in which the CGTRF was submitted to the Director General of Inland Revenue. These documents should be presented upon request for audit purposes, including documents related to tax relief claims under sections 132 and 133 of the Act.
For assessments raised under sections 91 and 96A, and subsections 90(3) and 101(2) of the Act, the tax or remaining tax balance should be paid within 30 days from the date of assessment. However, a grace period of seven days is allowed for this payment.
The Inland Revenue Board of Malaysia’s announcement of the CGTRF Filing Programme provides details on several aspects of the administrative requirements in relation to the implementation of CGT in Malaysia. Further details of the CGT administrative framework will be known when the CGTRF and explanatory notes are uploaded on the Inland Revenue Board’s website on 31 January 2024.
Our previous articles relating to the Malaysian Budget 2024 and CGT can be accessed here
Alert by Victoria Low (Associate) of the Tax Practice of Skrine.