Selling Shares in a Malaysian Company: When Does Capital Gains Tax Apply?

Foreign corporate investors selling shares in an unlisted Malaysian company may be subject to capital gains tax (CGT). Malaysia introduced CGT on qualifying capital asset disposals from January 1, 2024, although relevant disposals made between January 1 and February 29, 2024 were exempt.

When does CGT apply to a Malaysian share sale?

Malaysia’s CGT regime applies to companies, limited liability partnerships, trust bodies, and cooperatives that make gains from selling specified capital assets.

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Planning to sell shares in a Malaysian company? Contact Dezan Shira & Associates to assess your CGT exposure.

For foreign investors, this includes shares in an unlisted company incorporated in Malaysia. The rules can also cover shares in certain controlled companies incorporated outside Malaysia that own Malaysian real property or shares in another controlled company, subject to the applicable conditions.

Certain Labuan entities that elect or are subject to taxation under Malaysia’s Income Tax Act can also fall within the CGT regime.

How is the taxable gain calculated?

For shares acquired before January 1, 2024, the seller can choose between two methods. The first applies a 10 percent tax rate to the chargeable income from the disposal. The alternative applies a 2 percent rate to the gross disposal price.

For shares acquired on or after January 1, 2024, CGT is generally charged at 10 percent of the chargeable income.

When determining the gain, the calculation takes into account the disposal price and acquisition price together with permitted costs related to buying or selling the shares.

For instance, assume a foreign corporate investor acquired unlisted Malaysian shares before January 1, 2024, for RM7 million (US$1.7 million) and later sells them for RM10 million (US$2.4 million). Before taking other permitted costs into account, the gain would be RM3 million (US$720,000).

Applying the 10 percent method to the RM3 million (US$720,000) gain would result in CGT of RM300,000 (US$72,000). Applying the 2 percent method to the RM10 million (US$2.4 million) gross disposal price would result in CGT of RM200,000 (US$48,000).

Can a share sale qualify for a CGT exemption?

An exemption may be available for certain qualifying company restructuring schemes, subject to the applicable conditions.

Malaysia also provides a CGT exemption for qualifying disposals of shares for the purpose of an initial public offering. HASiL issued dedicated guidance on this exemption in July 2026.

What if the Malaysian company owns real estate?

Disposals of shares in a Malaysian real property company were previously subject to the Real Property Gains Tax (RPGT) regime.

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From January 1, 2024, disposals of real property company shares by companies, limited liability partnerships, trust bodies, and cooperatives generally moved from the RPGT regime to the CGT framework.

Certain Labuan entities conducting business activities under the Labuan Business Activity Tax Act remain subject to RPGT treatment for disposals of real property company shares.

When must the CGT return and tax be filed?

A seller within the CGT regime must submit a Capital Gains Tax Return Form electronically through the e-CKM service on Malaysia’s MyTax platform.

The return and CGT payment must generally be made within 60 days from the date of disposal.

Supporting documents used to calculate the gain do not generally need to be submitted with the CGT return, but they must be retained for seven years and provided if requested by HASiL.

Planning a Malaysian share sale? Contact Dezan Shira & Associates

Dezan Shira & Associates can assist foreign investors with CGT assessments, transaction structuring, available exemptions, and Malaysian tax filing requirements.

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