Finance Act, Income Tax (Exemption) (No. 7) Order 2023

The Finance (No. 2) Act 2023 (“the Act”) has been gazetted on 29 December 2023 with no material difference from the Finance (No. 2) Bill 2023.  The Act comes into operation on 30 December 2023.

The Act and KPMG’s highlights on the Finance (No. 2) Bill 2023 can be accessed via the above links.  Our highlights are intended to provide a general overview of the key tax changes and should not be used or relied upon as a substitute for detailed advice or as a basis for formulating business decisions

With the gazette of the Finance (No. 2) Act 2023, effective from 1 January 2024, Capital Gains Tax (“CGT”) will be imposed on gains made by companies, limited liability partnerships, trust bodies and co-operative societies from:-

(a) Disposal of shares in companies incorporated in Malaysia not listed on the stock exchange; 

(b) Disposal of shares under the new Section 15C (i.e. shares of a controlled company incorporated outside Malaysia which owns real property situated in Malaysia or shares of another controlled company, subject to meeting the 75% threshold conditions); and

(c) Disposal of capital assets situated outside Malaysia, upon remittance into Malaysia.

The Income Tax (Exemption) (No. 7) Order 2023 has then been gazetted to provide 2-months exemption for disposal made on or after 1 January 2024 to 29 February 2024 in respect of Item (a) above. However, the exemption does not apply to gains or profits of shares chargeable to tax as a business income under Section 4(a) of the Income Tax Act 1967.