With effect from 01.01.2022, the Real Property Gains Tax (“RPGT”) is exempted for property disposed by individual in the 6th and subsequent years of ownership. This is pursuant to the Real Property Gains Tax Act 1976 as amended by the Finance Act 2021 which was gazetted on 31.12.2021.
The latest RPGT Rates shall be as shown below:-
Disposal period | PART I Citizen/Permanent Resident/Executor of the estate of a deceased person who is a citizen or a Permanent Residence | PART II Company incorporated in Malaysia/trustee of a trust/body of persons registered under any written law in Malaysia | PART III Non-Citizen/Non-Permanent Resident/Executor of the estate of a deceased person who is Non-Citizen or Non-Permanent Resident/company not incorporated in Malaysia |
within 3 years | 30% | 30% | 30% |
in the 4th year | 20% | 20% | 30% |
in the 5th year | 15% | 15% | 30% |
in the 6th year and subsequent years | 0% | 10% |
Table 1: RPGT Rates
Increase in Retention Sum By Acquirer
The acquirer is required to retain the whole consideration sum or a sum of 3% of the total consideration price, whichever is lower, and pay to the Director General of the Inland Revenue Board for the purpose of RPGT save and except for the following:-
· 5% of the total consideration price where the disposer falls within Part II as stated in Table 1 above if the disposal is made within 3 years from the date of acquisition;
· 7% of the total consideration price where the disposer falls within Part III as stated in Table 1 above.
The Retention Sum shall be paid to the Director General of the Inland Revenue Board within 60 days from the date of the disposal of the Property.
Date of Disposal
Generally, the date of disposal is to be determined on the date of the agreement and it also applies to a conditional contract. However, it may differ if the transaction requires approval from the government or state government. Where the disposal is subject to such approval, the date of disposal is to be taken on the date of approval or if the said approval is conditional, it will be based on the date when the last of such conditions is satisfied.
Non-payment of moneys by person leaving Malaysia
Pursuant to Section 22 of the RPGT Act, the Director General of the Inland Revenue Board, where he is of the opinion that any person is about or likely to leave Malaysia without paying:-
• all the tax payable by him (whether or not due or due and payable);
• all sums payable by him under section 21(4) (in which tax assessed but not paid within 30 days or such longer period allowed by the DGIR); or
• debt payable by him under section 21B(2) (in which failure by the acquirer to pay the amount to be retained by him plus interest);
may issue a certificate to the Commissioner of Police or the Director of Immigration requesting that the person concerned be prevented from leaving Malaysia unless he pays such tax, sums or debt or furnishes security to the Director General of the Inland Revenue Board for the payment of the same.
Any person who knowing that a certificate has been issued in respect of him under Section 22 above voluntarily leaves or attempts to leave Malaysia without paying all the tax, sums or debt payable by him or furnishing security to the Director General of the Inland Revenue Board shall on conviction be liable to imprisonment for a term not exceeding two years or to a fine not less than RM200 and not more than RM20,000 or to both.
Exemptions from RPGT
There are several exemptions that may save you from RPGT upon disposal/transfer of property. For examples:-
· Malaysian citizens and permanent residences may elect for the one off RPGT exemption for the disposal of
their residential property (it is only to be applied once in a lifetime)
· Disposal of property made between husband and wife, parents and children, grandparents and
grandchildren by way of gift
· Gifts made to the government, state government, local authority or approved charity
· Disposal of assets as a result of compulsory acquisition under any law
· Transmission or transfer of assets of a deceased individual
· Transfer of assets owned by:
− an individual;
− the wife of an individual;
− an individual jointly with his wife;
− with a connected person;
− a nominee or trustee for an individual, for the wife of the individual or for both,
to a company (whether or not resident in Malaysia), controlled by either of the aforesaid parties, for a consideration consisting of shares in the company or consisting substantially of shares in the company and the balance of a money payment.
Hence, an individual shall utilise the exemptions in the event the disposal of the property is made within five (5) years to achieve greater financial profit.
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