UPDATES ON REAL PROPERTY GAINS TAX (RPGT)

Current RPGT Rates (as of Year 2025)

RPGT Rates	Individuals  (Malaysian Citizens / Permanent Residents)	Companies / Trustee / Society registered in Malaysia	Foreigners (Non-Citizens / Executor of Estate of Deceased Non-Citizen / Companies not registered in Malaysia)
Disposal in 1st Year	30%	30%	30%
Disposal in 2nd Year	30%	30%	30%
Disposal in 3rd Year	30%	30%	30%
Disposal in 4th Year	20%	20%	30%
Disposal in 5th Year	15%	15%	30%
Disposal in 6th Year & beyond	0%	10%	10%

What is RPGT?

RPGT is a tax governed by the Real Property Gains Tax Act 1976 imposed on the chargeable gain arising from the disposal of real property or shares in real property companies. It is part of Malaysia's tax system administered by the Inland Revenue Board of Malaysia (IRB).

Who is Liable to Pay RPGT?

Any individual, company, society or organisation that disposes of a property or shares in a real property company is subject to RPGT. This includes Malaysian residents as well as non-residents.

Filing and Payment

Upon disposal of a property, the taxpayer is required to submit Form CKHT 1A to the IRB within 60 days from the date of disposal. RPGT must be paid within 30 days from the date of assessment issued by the IRB.

RPGT Retention Sum

The RPGT Retention Sum shall be remitted to the Director General of Inland Revenue within sixty (60) days from the date of the disposal.

For the disposal of properties owned less than five (5) years by an individual (Malaysian Citizen or Permanent Resident), 3% RPGT Retention Sum (i.e. a sum equivalent to 3% of the total value of the consideration) is required to be remitted to the Director General of Inland Revenue.

From 1 January 2022 onwards, for the disposal of properties by a company incorporated in Malaysia, or a trustee of a trust, or a body of person registered under any written law in Malaysia (including a society) made within three (3) years from the date of acquisition, the remission of 5% RPGT Retention Sum is required to be remitted, as provided in Section 30 of the Finance Act 2021. If the disposal of properties is made in the 4th Year and beyond, 3% RPGT Retention Sum is required to be remitted.

For the disposal of properties by a foreigner (i.e. a person who is not a Malaysian citizen and not a permanent resident, or an executor of estate of a deceased person who is not a Malaysian citizen and not a permanent resident, or a company not incorporated in Malaysia), 7% RPGT Retention Sum is required to be remitted.

The amount of the RPGT Retention Sum remitted to the Director General of Inland Revenue is to be applied against the RPGT payable by the disposer.

RPGT or CGT?

After the implementation of Capital Gains Tax (CGT) effective from 1 March 2024 under the Finance (No. 2) Act 2023, the gains or profits from the disposal of capital asset (i.e. moveable or immovable property, including any rights or interests thereof) are treated as income chargeable to income tax under the Income Tax Act 1967.

Previously, RPGT is payable on the disposal of shares by a Real Property Company (RPC).

With the implementation of CGT, RPGT no longer applies to the disposal of shares by RPC, Limited Liability Partnership, Trust Body and Co-operative Society and that CGT will be payable on the sale of unlisted shares in Malaysian-incorporated companies from 1 March 2024 onwards [regardless of whether the shares are of a Real Property Company (RPC) or not].

If the disposer is an individual or a Labuan entity which satisfies the economic substance requirement and is exempted from CGT, the disposer remains subject to RPGT if the disposal is of the shares in a RPC.

Introduction of the Self-Assessment System

For each disposal of real property [i.e. any land situated in Malaysia and any interest, option or other right in or over such land], both the disposer and acquirer are required to submit RPGT returns respectively within sixty (60) days from the date of disposal (or the unconditional date). The Director General of Inland Revenue will issue a notice of assessment based on the RPGT returns. Any RPGT due and payable on the notice of assessment is required to be paid within thirty (30) days from the date of the notice of assessment.

As announced in Malaysia’s Budget 2024, effective from 1 January 2025, the self-assessment system will be implemented for RPGT and the RPGT returns submitted will be deemed as the assessment raised by the Director General of Inland Revenue.

It was proposed that the RPGT returns submitted may be amended once within 6 months from the due date of submission of the RPGT returns. The tax or additional tax payable pursuant to the amended returns shall be increased by 10% of such tax or additional tax and it shall be due and payable on the day the amended returns are furnished.

In the meantime, we will wait for more information and guidelines from LHDN in respect of this new self-assessment system.