TaxSavvyMY

Foreign holding company owning Malaysian land

We sold a BVI company that owns land in Malaysia. Is CGT due here?

The situation

Under s15C, disposal of shares in a foreign controlled company that owns Malaysian real property or shares can be taxable in Malaysia.

The law

  • Sec 15C, Income Tax Act 1967: Disposal of shares in a foreign controlled company owning Malaysian real property or shares treated as taxable
  • Secs 65E and 65F and Part XXI of Schedule 1, Income Tax Act 1967: Capital gains tax on disposal of unlisted shares: 10% of gain, or 2% of gross price for shares bought before 1 Jan 2024

What it means for you

The test usually looks at whether Malaysian property or shares make up 75% or more of the company's tangible assets. Model the structure before selling.

What to do

  1. Get the target's balance sheet.
  2. Apply the 75% asset test.
  3. Compute CGT.
  4. File within 60 days.

We can do this for youCapital gains tax on disposal of unlisted shares: MYR 2,000

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