RPGT or Real Property Gains Tax is a form of Capital Gains Tax that is only imposed on the disposal of property in Malaysia, based on the Real Property Gains Tax Act 1976. Put simply, in Malaysia when a seller wishes to sell their property, they need to pay a tax called RPGT. The tax deducted is calculated based on the profit a seller may make from selling a property. It applies to both residents and non-residents.
Recently, the government announced that they were making three amendments to the Real Property Gains Tax (RPGT) in budget 2017. These amendments came into effect as of Jan 1, 2018 and will affect both non-citizens and non-permanent residents in Malaysia.
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1. Amendment Of Section 21b
If you purchase or acquire a property from someone who not a citizen or a permanent resident, you must retain either the whole of that money or a sum not exceeding 7% of the total value of the consideration whichever is the lesser. Also, whether that money is retained or not, you must remit the amount retained to the Inland Revenue Board (IRB) within sixty days of signing of the Sale and Purchase Agreement (SPA).
There has been no change on amount of retention on the disposal of property by a Malaysian citizen or permanent resident.
2. Amendment Of Schedule 2
This amendment made to Schedule 2 Paragraph 3 of the Real Property Gains Tax Act 1976, states that the disposal price may only be deemed equal to the acquisition price when:
- There is a transfer of asset between spouses, where the asset to be disposed of is owned by the husband or the wife, who is a citizen.
- There is a transfer of asset where the asset to be disposed of is owned by an individual or the individual’s wife, who is a citizen, or where the asset is jointly owned by the individual and his wife, both of whom are citizens, or where the asset is jointly owned by the individual and his connected person, both of whom are citizens.
This means that should a non-citizen make a profit from a sale, the IRB will reinstate and treat it as a gain for RPGT purposes.
3. Amendment of Schedule 5
Part III of Schedule 5 of the RPGT Act has been amended and expanded on. It now applies the same tax rates imposed on an individual who is not a citizen and not a permanent resident to an executor of the estate of a deceased person who is not a citizen and not a permanent resident.
Do you want to know more about how RPGT affects you? Talk to us, send us a message at hello@iqiglobal.com or call us at 012-299-6155 or 037-450-6655.
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