Real Property Gain Tax (RPGT) or Cukai Keuntungan Harta Tanah (CKHT) is a tax on profit levied by the Inland Revenue Board of Malaysia (LHDN) which is chargeable upon the gain of profit by individuals (subject to citizenship and residentship) or companies wherein the profit is made from the sale of land, shares (in Real Property Companies) or real property by the said individuals or companies.
RPGT is implemented according to the provisions of the Real Property Gains Tax Act 1976 and Finance Act 2021 (subject to changes that may be made through the Finance Bill 2023[1]).
The amount of RPGT is applicable to net Taxable Capital Gain which is calculated as below:
A. 2023 RPGT Rates
The disposal of chargeable land, shares or real properties (“said Assets”) for individuals are categorised into two, which are for individuals who are citizens/permanent residents of Malaysia or individuals who are non-citizens/not permanent residents.
CITIZEN/PERMANENT RESIDENTS
The rate of tax charged for individuals who are citizens/permanent residents of Malaysia for the disposal within 3 years after the date of acquisition of any of the said Assets (“the said Asset”) is 30%, followed by 20% in the fourth year and 15% in the fifth year. No RPGT tax is charged on the disposal of the said Asset if the disposal is done in the sixth year or above after the date of acquisition of the said Asset.
NON-CITIZEN/PERMANENT RESIDENTS
On the other hand, the rate of RPGT tax charged for individuals who are non-citizens/not permanent residents of Malaysia for the disposal within 5 years after the date of acquisition of the said Asset is 30% while the same said disposal in the sixth year and above after the date of acquisition of the said Asset would have an RPGT tax rate of 10%. The same RPGT tax rates for individuals who are non-citizens/not permanent residents of Malaysia also apply to the executor of an estate of a deceased person who is not a citizen nor a permanent resident and companies not incorporated in Malaysia.
COMPANIES
As for companies incorporated in Malaysia or a trustee of a trust or body of persons registered under Malaysian law, RPGT tax at the rate of 30% is charged for disposal within three years after date of acquisition of the said Asset, followed by 20% in the fourth year, 15% in the fifth year and 10% in the sixth year and above after the date of acquisition of the said Asset.[2]
B. Available RPGT Exemptions
There are several exemptions from the RPGT tax which may reduce or fully exempt the whole RPGT tax supposed to be charged to individuals and companies in Malaysia.
The generally known RPGT exemptions include:
- once-in-a-lifetime exemption only for Malaysian citizens/permanent residents and only for residential properties including a service apartment and small office home office (SOHO) in which an exemption of 10% of RPGT tax on the profits or RM10,000.00 whichever is higher is allowed upon application for the said exemption[3];
- gifts by way of transfer between family members with love and affection as consideration of either husband and wife, parent and children or grandparent and grandchildren (inapplicable for transfer between siblings) wherein 100% exemption of RPGT tax on the profits is allowed upon application for the said exemption subjecting to disposer being a Malaysian citizen[4]; and
- disposal of the said Asset (except shares) below or of the price/value of RM200,000 subjecting to the disposer being a Malaysian citizen wherein there is a full 100% exemption of RPGT tax on the profits[5].
Payment of the RPGT tax for disposal of any of the said Assets must be settled within 60 days (or such extensions allowed by Director General upon written request) from the disposal date of the aforesaid asset[6] failing which the penalty is 10% of the amount payable as RPGT tax[7].
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[1] Bernama (2023), The Edge Market, “Two MOF bills tabled for first reading in Parliament”, Last modified (n.d.), Accessed on 22.03.2023, https://www.theedgemarkets.com/node/659134
[2] Part I, II and II, Schedule 5 of the Real Property Gains Tax Act 1976 read together with Section 4(1) of the Real Property Gains Tax Act 1976.
[3] Schedule 3 of the Real Property Gains Tax Act 1976 read together with Section 8 of the Real Property Gains Tax Act 1976.
[4] Paragraph 12, Schedule 2 of the Real Property Gains Tax Act 1976.
[5] Order 2 of the Real Property Gains Tax (Exemption) Order 2018 (P.U. (A) 360).
[6] Section 13 of the Real Property Gains Tax Act 1976.
[7] Fahri Ahmed (2023), iProperty.com.my, “Real Property Gains Tax (RPGT) 2023 in Malaysia & How to calculate it?”, Last Modified on 15.03.2023, Accessed on 22.03.2023, https://www.iproperty.com.my/guides/rpgt-2023-malaysia-how-to-calculate-it-23644.
