(Tax Update) Capital Gain Tax: Gains From Disposal Of Capital Asset Arising From Outside Malaysia Received in Malaysia

The Income Tax (Exemption) (No. 3) Order 2024 (“Exemption Order”) was gazetted on 4 March 2024.

The Exemption Order provides exemption from CGT on gains from disposal of foreign capital assets received by companies, limited liability partnerships (LLPs), trust bodies and co-operative societies resident in Malaysia which meet economic substance requirements (ESR) from 1 January 2024 to 31 December 2026.

Key Summaries of the Exemption Order

This exemption applies to gains from selling foreign assets by certain entities include companies, partnerships, trusts, and co-operatives that meet certain conditions in Malaysia.
The exemption is valid from January 1, 2024, to December 31, 2026.
The exemption period is timed to end together with the exemptions granted for foreign-sourced income received by resident individuals and foreign-sourced dividend income received by resident companies, LLPs, trust bodies and co-operative societies until 31 December 2026 under the Income Tax (Exemption) (No. 5) 2022 and Income Tax (Exemption) (No. 6) 2022, respectively.
Conditions for exemption involve having enough employees and spending enough on operations in Malaysia.
These conditions are guided by future guidelines from the Director General of Inland Revenue.
Deductions related to these exempt gains can't be used to lower taxable income.
Gains from selling intellectual property rights (IPR) are not exempt.
This order doesn't apply to banking, insurance, or transport (sea/air) companies.

Past Blog on CGT

Read our past blog on CGT

Capital gain tax https://www.ktp.com.my/blog/malaysias-budget-2024-capital-gain-tax-part1/23nov23
Exemption Period on CGT https://www.ktp.com.my/blog/capital-gain-tax-malaysia-2024/04jan24
Real property company under CGT https://www.ktp.com.my/blog/real-property-company-under-capital-gain-tax/10jan24
Capital Gain Tax: Filing Deadline https://www.ktp.com.my/blog/capital-gain-tax-filing-deadline/30jan24
Capital Gain Tax: Unresolved Questions https://www.ktp.com.my/blog/capital-gain-tax-unresolved-questions/23feb24

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