The Malaysian Finance (No. 2) Act 2017 (Act 801) comes into force
Updated: Sep 24, 2020
Sections 15 to 18 of the Finance Act (No. 2) 2017 (Act 801) has come into operation on 1 January 2018. This alert provides a summary for some of the key amendments it has made to the Real Property Gains Tax Act 1976 (“RPGT Act”), which may affect you.
(i) Retention Sum for Non-Citizen and Non-Permanent Resident
Previously, in the case where the consideration for the acquisition of a chargeable asset consists wholly or partly of money, the acquirer must retain the whole monetary amount or a sum of 3% of the total value of the consideration, whichever is lower, and pay this to the Director-General within 60 days after the date of disposal.
The new amendment introduced a new subsection to the RPGT Act, Section 21B (1A), which increased the rate from 3% to 7% for a disposer who is not a citizen and not a permanent resident. As such, a sum of 7% (instead of 3%) of the total value of the consideration is to be retained by the acquirer if the disposer is not a Malaysian citizen or permanent resident.
(ii) RPGT Rates for Non-Malaysian Citizen and Non-Permanent Resident Extended to Deceased Person
Previously, Schedule 5 of the RPGT Act only applied to cases where the disposer was an individual who is not a citizen and not a permanent resident.
Now, with the new amendment, the scope is widened to include an executor of the estate acting on behalf of a deceased person who is not a citizen and not a permanent resident for any chargeable asset of the estate.
The table below sets out the percentage of retention sum of the total value of consideration to be retained by the acquirer depending on the category of disposer.
The following terms are as defined in the Real Property Gains Tax Act 1976, unless otherwise stated:
“Citizen” means a Citizen of Malaysia as defined in the Act 388 - Interpretation Acts 1948 and 1967 (Consolidated and Revised 1989).
“Permanent resident” means a person treated as such under any written law relating to immigration.
“Company” means a body corporate and includes any body of persons established with a separate legal identity by or under the laws of a territory outside Malaysia.