The exemptions with respect to Capital Gains Tax specific to approved initial public offering (IPO) as well as restructuring of companies within the same group were gazetted on 8 October 2024.
Both gazette orders exempt a company, limited liability partnership, trust body or co-operative society from the payment of income tax in respect of chargeable income from gains or profits received from the disposal of shares of a company incorporated in Malaysia, subject to the conditions outlined below.
Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024
The conditions to qualify for exemptions are as below:
- the disposal of shares shall be made within the period from 1 March 2024 to 31 December 2028;
- the acquirer is a company resident in Malaysia;
- the disposal is part of a scheme for restructuring of companies in the same group to increase efficiency in the operation of the disposer, the acquirer, or both;
- the consideration for the disposal of shares shall comprise no less than 75% in shares of the acquirer company. The shares and the balance to be paid in cash shall be issued to the disposer;
- a written application is required to be made to the IRB three years after the disposal date; and
- the exemption does not change the requirement to file CGT returns.
Further to the above conditions, the order also stipulates that if the acquirer subsequently disposes the shares, the acquisition price shall be deemed to equal the disposer’s acquisition price. Further, losses incurred from the disposal of shares shall be disregarded.
Income Tax (Initial Public Offering) (Exemption) Order 2024
The conditions to qualify for exemptions are as below:
- the disposal of shares shall be made within the period from 1 March 2024 to 31 December 2028;
- the acquirer is a company resident in Malaysia;
- the disposal of shares is related to restructuring for IPO;
- application for IPO shall be made to Bursa (ACE market and LEAP market) or Securities Commission (Main market) within 1 year from the date of disposal and the approval shall be obtained on or before 31/12/2028;
- a written application is required to be made to the IRB within one year from the date of approval of the IPO; and
- the exemption does not change the requirement to file CGT returns.
Further, losses incurred from the disposal shall be disregarded.
Please refer to this link for further detail information on Capital Gains Tax.
