Capital gains tax Malaysia is one of the most significant tax developments in Malaysian corporate history — introduced on 1 January 2024 and significantly expanded from 1 January 2026 under the Finance Act 2025. Every company director, investor, LLP partner, and trustee who has ever considered selling unlisted shares in a Malaysian company needs to understand how capital gains tax Malaysia applies to their transaction. In 2026, the definition of what constitutes a "disposal" for capital gains tax Malaysia purposes was dramatically broadened to include share redemptions, conversions, and company windings-up — transforming many routine corporate transactions into potential CGT events. This complete guide covers who pays capital gains tax Malaysia, the 10% vs 2% rate choice, every current exemption, the Budget 2026 changes, how to file the e-CKM form within 60 days, and how CGT differs from RPGT.

10% / 2% Capital gains tax Malaysia rates — 10% on net gain or 2% on gross proceeds

1 Mar 2024 Capital gains tax Malaysia effective date for unlisted Malaysian shares

60 days Filing deadline — e-CKM form must be submitted within 60 days of disposal

1 Jan 2026 Budget 2026 expanded disposal definition — significantly broader CGT scope

What Is Capital Gains Tax Malaysia? — Legal Basis & Introduction

Capital gains tax Malaysia (CGT) is a tax on profits arising from the disposal of certain capital assets — primarily unlisted company shares. It was introduced through the Finance (No. 2) Act 2023, which added a new income category — "gains or profits from the disposal of capital assets" — under Section 4(aa) of the Income Tax Act 1967. Despite being called a capital gains tax, these gains are formally classified as taxable income under the ITA.

Before the introduction of capital gains tax Malaysia, gains from selling shares were generally not taxable in Malaysia (unless they constituted business income under Section 4(a)). The introduction of CGT represented a fundamental shift in Malaysia's tax framework, bringing the country closer to international norms where capital gains from asset disposals are taxed.

Understanding the precise scope of capital gains tax Malaysia is essential: it applies narrowly to specific categories of assets (primarily unlisted company shares), is levied only on certain types of taxpayers (companies, LLPs, trust bodies, co-operatives — not individuals in most cases), and operates separately from the existing RPGT system that covers real property disposals.

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Key Distinction: Capital gains tax Malaysia is NOT a tax on investment gains from shares listed on Bursa Malaysia (stock market). Gains from selling listed shares remain completely tax-free in Malaysia. CGT in Malaysia applies specifically to unlisted company shares and certain foreign capital assets — making it most relevant to business owners, Sdn Bhd shareholders, private equity investors, and corporate restructurers.

Capital Gains Tax Malaysia Timeline — From Introduction to Budget 2026

1 January 2024 — Foreign Capital Assets Capital gains tax Malaysia takes effect for gains from disposal of capital assets situated outside Malaysia when remitted into Malaysia. This was the first element of the CGT regime to take effect.

1 January – 29 February 2024 — Transition Exemption Disposals of unlisted Malaysian company shares during this two-month period were exempted from capital gains tax Malaysia under Exemption Order P.U.(A) 410/2023, giving companies time to adjust.

1 March 2024 — Unlisted Malaysian Shares CGT Effective Capital gains tax Malaysia on disposal of unlisted shares in Malaysian-incorporated companies became fully effective. Companies, LLPs, trust bodies and co-operatives selling such shares from this date face CGT obligations.

October 2024 — IPO and Group Restructuring Exemptions Gazetted The Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024 and IPO-related exemption orders were gazetted on 8 October 2024, providing long-awaited clarity on capital gains tax Malaysia treatment for these corporate events.

1 January 2026 — Budget 2026 Expanded Disposal Definition (New) The Finance Bill 2025, gazetted following Budget 2026, dramatically expanded what constitutes a "disposal" for capital gains tax Malaysia purposes. Share redemptions, conversions, company windings-up, and any event causing cessation of ownership now all trigger CGT — transforming the scope of compliance obligations.

Who Must Pay Capital Gains Tax Malaysia?

This is the most commonly misunderstood aspect of capital gains tax Malaysia. CGT does NOT apply to everyone — it applies to a specific list of taxpayer categories. Getting this right determines whether a transaction triggers any capital gains tax Malaysia obligation at all.

Taxpayer Category	Subject to CGT Malaysia?	Notes
Company incorporated in Malaysia (Sdn Bhd, Berhad)	✔ Yes	Primary category subject to capital gains tax Malaysia on unlisted share disposals
Limited Liability Partnership (LLP)	✔ Yes	Subject to CGT Malaysia on the same basis as companies
Trust bodies	✔ Yes	Family trusts, unit trusts (unless specifically exempted)
Co-operative societies	✔ Yes	Subject to capital gains tax Malaysia on covered disposals
Individual persons (Malaysian citizens, PRs, foreigners)	✘ Generally No	Individuals personally holding unlisted shares are NOT subject to capital gains tax Malaysia on those disposals — a key exemption that makes individual ownership structuring relevant
Unit trusts (resident, non-REIT/PTF)	Exempt until 31 Dec 2028	Special time-limited exemption from CGT Malaysia regardless of underlying assets
The individual exemption from capital gains tax Malaysia is based on the current law as enacted. Individuals who receive gains through a company or trust structure still face CGT at the entity level. Source: LHDN guidelines and PwC Malaysia CGT summary.

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Individuals Are Not Subject to CGT on Unlisted Shares: An individual Malaysian shareholder who personally disposes of unlisted shares in a Sdn Bhd does NOT pay capital gains tax Malaysia on those gains. This is a significant structural difference that makes the CGT Malaysia regime relevant primarily to corporate sellers, LLPs, and trust structures rather than to individual investors. However, where the individual holds the shares through a company or trust, that vehicle pays CGT on any disposal.

What Assets Are Subject to Capital Gains Tax Malaysia?

The assets within scope of capital gains tax Malaysia for entities (companies, LLPs, trusts, co-operatives) are:

Shares in unlisted companies incorporated in Malaysia: This is the primary asset category for capital gains tax Malaysia. Selling shares in any Sdn Bhd, Bhd, or other Malaysian-incorporated company that is not listed on Bursa Malaysia triggers CGT for corporate sellers.
Shares in foreign companies deriving value from Malaysian real property (RPC shares): Where a foreign company's value consists substantially of Malaysian real property, the disposal of its shares by Malaysian entities is subject to capital gains tax Malaysia.
Foreign capital assets remitted to Malaysia: Gains from disposal of capital assets situated outside Malaysia, when those gains are remitted into Malaysia, are subject to capital gains tax Malaysia for entities. (Various exemptions apply until 31 December 2026 for qualifying entities meeting economic substance requirements.)
Listed shares on Bursa Malaysia: EXEMPT from CGT — gains from selling listed securities remain tax-free. This is an important boundary of capital gains tax Malaysia scope.
Real property: NOT subject to CGT — real property disposals continue to be governed by the Real Property Gains Tax (RPGT) framework, not capital gains tax Malaysia.

Capital Gains Tax Malaysia Rates — 10% vs 2% Choice

One of the most commercially important features of capital gains tax Malaysia is the choice of rate method available to the disposer. Depending on the transaction structure and profit margin, one option may produce significantly lower tax than the other.

Option 1 — Net Gain Basis

10%

on net chargeable gain

Available to ALL disposers
Tax base: disposal price minus acquisition cost and allowable expenses
Better for low-margin disposals (small profit relative to sale price)
Requires accurate cost basis documentation
Shares acquired before 1 March 2024: acquisition cost deemed to be market value at 28 February 2024

Option 2 — Gross Proceeds Basis

on gross disposal proceeds

Only available for shares acquired BEFORE 1 January 2024
Tax base: the full disposal price (no deduction for cost)
Better for high-margin disposals (large profit relative to sale price)
Simpler — no need to establish historical cost basis
Not available for post-1 January 2024 acquisitions

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Choosing Between 10% and 2%: The break-even point is when your gain equals 20% of the disposal price. If your chargeable gain is less than 20% of the disposal price, the 10% on net gain is lower. If your profit exceeds 20% of the sale price, the 2% on gross proceeds is lower. For example: selling shares for RM10,000,000 with a net gain of RM3,000,000 — 10% on RM3,000,000 = RM300,000, but 2% on RM10,000,000 = RM200,000. The 2% option saves RM100,000 here. Always model both options before filing your capital gains tax Malaysia return.

Worked Calculation Examples — Capital Gains Tax Malaysia 2026

Example 1: Company Selling Unlisted Shares — Pre-2024 Acquisition

🏢 ABC Sdn Bhd sells 100% stake in XYZ Sdn Bhd — shares acquired 2018 for RM1M, sold 2026 for RM5M

Gross disposal proceedsRM 5,000,000

Option A — 10% on net gain:

Deemed acquisition cost (MV at 28 Feb 2024, e.g. RM2.5M)RM 2,500,000

Allowable expenses (legal, stamp)RM 80,000

Net chargeable gainRM 2,420,000

Capital gains tax Malaysia (10%)RM 242,000

Option B — 2% on gross proceeds

2% × RM5,000,000RM 100,000

Recommended option (lower CGT)Option B — RM100,000 saves RM142,000

Example 2: Low-Margin Sale — Post-2024 Acquisition (Only 10% Available)

🏢 Company sells unlisted shares acquired in 2025 for RM8M, sold 2026 for RM9M (small gain)

Disposal proceedsRM 9,000,000

Acquisition cost (2025 purchase price)RM 8,000,000

Net gainRM 1,000,000

Option A: 10% on net gain (RM1M × 10%)RM 100,000

Option B: 2% (NOT available — acquired after 1 Jan 2024)Not applicable

Capital gains tax Malaysia payableRM 100,000 (only option available)

Budget 2026 — Expanded "Disposal" Definition: The Most Important 2026 Change

The Finance Bill 2025, tabled on 18 November 2025 following the Budget 2026 speech on 10 October 2025, introduced the single most impactful change to capital gains tax Malaysia since its introduction. From 1 January 2026, the definition of "disposal" under Section 65C of the Income Tax Act 1967 was substantially broadened.

Old Definition (Pre-2026)

Under the pre-2026 definition, most taxpayers understood capital gains tax Malaysia "disposal" to mean a direct sale or transfer of shares — a straightforward commercial transaction where ownership changes hands for consideration.

New Definition (From 1 January 2026)

From 2026, a "disposal" for capital gains tax Malaysia purposes is triggered by any event that causes cessation of ownership of the shares — not just a traditional sale. This now explicitly includes:

Share redemptions: Where a company redeems its own shares (including preference share redemptions) — this is now a capital gains tax Malaysia disposal event for the company whose shares are redeemed
Share conversions: Converting shares of one class to another (e.g., preference shares to ordinary shares) now potentially triggers CGT Malaysia
Company winding up / liquidation: When assets are distributed to shareholders upon winding up, this constitutes a disposal for capital gains tax Malaysia purposes
Any other event causing cessation of ownership: A catch-all that captures transactions beyond the three examples above

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Corporate Actions Now Subject to Capital Gains Tax Malaysia: This Budget 2026 change transforms the CGT landscape for Malaysian companies. Share buybacks, capital reductions, preference share redemptions, and corporate restructurings that previously fell outside the scope of capital gains tax Malaysia may now be disposal events requiring e-CKM filing and tax payment within 60 days. Companies planning any of these transactions in 2026 should obtain tax advice from a licensed tax firm before proceeding.

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Capital Gains Tax Malaysia Exemptions 2026

Several categories of capital gains tax Malaysia disposal are exempt from CGT under specific orders and exemptions:

✅ Listed Shares on Bursa Malaysia

Gains from disposing of shares listed on Bursa Malaysia are completely outside the scope of capital gains tax Malaysia. This exemption applies to all taxpayer categories — companies, LLPs, trusts, and individuals. Only unlisted shares trigger CGT.

✅ Individual Shareholders — Personal Holdings

Individuals personally disposing of unlisted shares are not subject to capital gains tax Malaysia under the current law. This is a significant structural exemption that makes individual ownership relevant for tax planning purposes.

✅ IPO-Related Disposals

Disposals of unlisted shares in connection with an IPO approved by Bursa Malaysia are exempted from capital gains tax Malaysia. The Income Tax (IPO Exemption) Order was gazetted on 8 October 2024 with specific conditions on the timing and structure of the exemption application.

✅ Approved Group Restructuring

Internal group restructuring transactions approved by LHDN under the Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024 can be exempt from capital gains tax Malaysia. Applications require meeting specific conditions and guidelines under Section 134A of the ITA.

✅ Venture Capital Investments

Disposals of shares in certain qualifying venture capital investments may be exempt from capital gains tax Malaysia under conditions approved by the Ministry of Finance. This facilitates the venture capital ecosystem by reducing tax friction on exits.

✅ Unit Trusts (Until 31 December 2028)

Resident unit trusts (excluding REITs and Property Trust Funds listed on Bursa) are exempt from capital gains tax Malaysia for disposals between 1 January 2024 and 31 December 2028. This four-year exemption supports the Malaysian unit trust industry during the CGT transition.

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IPO and Group Restructuring Exemptions — File First, Claim Later: For IPO-related and group restructuring capital gains tax Malaysia exemptions, the current position is that the disposer must first file the e-CKM return and pay CGT within 60 days of disposal — then apply for the exemption and seek a refund three years after the disposal date. This "pay now, reclaim later" approach requires careful cash flow planning for entities relying on these exemptions. Consult a tax firm in Malaysia to structure the application correctly.

Foreign Capital Assets & Remittance — CGT Malaysia Rules

For entities (companies, LLPs, trusts, co-ops) with capital assets situated outside Malaysia, the capital gains tax Malaysia rules on remittance of foreign-sourced gains are as follows:

Gains from foreign capital assets remitted to Malaysia are generally taxable at the entity's normal income tax rate (not the 10%/2% CGT rate — they are treated as income under Section 4(aa))
Exemption until 31 December 2026: Entities meeting specific economic substance requirements may qualify for an exemption on foreign capital gains remitted to Malaysia — this exemption expires on 31 December 2026 under current provisions
Individuals: Foreign-sourced income (including capital gains) remitted to Malaysia by resident individuals remains exempt from income tax until 31 December 2026 with qualifying conditions
Post-2026, entities with foreign capital assets who have not yet established economic substance in Malaysia should take urgent advice from a licensed tax firm

How to File Capital Gains Tax Malaysia — e-CKM Form

Every taxable disposal under capital gains tax Malaysia rules requires a separate filing within 60 days of the disposal date. Here is the complete filing process:

Determine the Disposal Date

For share sales, the disposal date is typically the date the share transfer document is executed. For the new 2026 disposal categories (redemptions, conversions, windings-up), the disposal date is the date of the relevant corporate event. The 60-day capital gains tax Malaysia filing clock starts from this date.

Calculate Your CGT Liability — Both Options

Model both the 10% net gain and 2% gross proceeds options (if the 2% option is available — i.e., shares acquired before 1 January 2024). For the 10% calculation, establish the acquisition cost — for pre-March 2024 acquisitions, this is the market value as at 28 February 2024. Choose the option that produces the lower capital gains tax Malaysia liability.

Access e-CKM Form on LHDN MyTax

Log in to LHDN MyTax using the entity's Tax Identification Number (TIN) and Digital Certificate. Navigate to the e-CKM (CGT Return Form) module. A separate e-CKM form must be submitted for each individual disposal event — batch filing is not available under the current capital gains tax Malaysia filing system.

Complete and Submit the e-CKM Form

Enter all disposal details: date, description of shares disposed, disposal proceeds, acquisition cost (or election of 2% gross option), allowable expenses, and chosen rate method. The e-CKM system will compute the capital gains tax Malaysia payable. Review carefully — errors in the self-assessed CGT return are the entity's liability.

Pay CGT Within 60 Days

The capital gains tax Malaysia payment is due within the same 60-day window as the filing. Payment is made electronically via FPX through the MyTax portal. Note: CGT disposals do NOT need to be included in the entity's annual tax estimate (Section 107C) — the 60-day return and payment obligation is entirely separate from the normal corporate income tax cycle.

Capital Gains Tax Malaysia vs RPGT — Key Differences

Many business owners confuse capital gains tax Malaysia with the Real Property Gains Tax (RPGT) that has existed since 1976. They are entirely separate taxes with different assets, rates, and filing systems.

Factor	Capital Gains Tax Malaysia (CGT)	Real Property Gains Tax (RPGT)
Asset covered	Unlisted company shares, foreign RPC shares, remitted foreign capital gains	Real property (land, buildings, real property company shares under old rules)
Effective date	1 March 2024 (Malaysian unlisted shares), 1 January 2024 (foreign assets)	1976 (long-established Malaysian tax)
Applies to individuals?	No — individuals personally holding unlisted shares are NOT subject to CGT	Yes — all categories including individuals
Rates	10% on net gain OR 2% on gross proceeds (pre-2024 acquisitions)	0%–30% depending on holding period and taxpayer category
Filing form	e-CKM form via MyTax	CKHT 1A (disposer) and CKHT 2A (acquirer) via e-CKHT on MyTax
Filing deadline	60 days from disposal date	60 days from disposal date
6-year exemption (citizen/PR)	No equivalent exemption for CGT Malaysia	Yes — 0% RPGT for citizens/PRs after 6 years

Frequently Asked Questions — Capital Gains Tax Malaysia 2026

Do individuals pay capital gains tax Malaysia on unlisted shares?

Under current law, individuals personally holding and disposing of unlisted shares are generally not subject to capital gains tax Malaysia. CGT applies to companies, LLPs, trust bodies, and co-operatives — not to individual shareholders directly. This means an individual who owns shares in a Sdn Bhd personally and sells them does not currently pay capital gains tax Malaysia on the gain. However, if those shares are held through a company or trust that disposes of them, the entity pays CGT. Individual investors should verify the current position with a licensed tax professional, as the CGT rules continue to evolve.

What is the capital gains tax Malaysia rate on unlisted shares?

There are two rate options for capital gains tax Malaysia on unlisted shares. Option 1: 10% on the net chargeable gain (disposal price minus acquisition cost and allowable expenses). Option 2: 2% on the gross disposal proceeds — but this is only available if the shares were acquired before 1 January 2024. The entity chooses whichever option produces the lower tax. For pre-2024 acquisitions, model both options before filing. For post-2024 acquisitions, only the 10% net gain option is available. The break-even between the two options is when the gain equals 20% of the disposal price.

What changed for capital gains tax Malaysia in 2026?

The most significant capital gains tax Malaysia change in 2026, introduced by the Finance Bill 2025 (Budget 2026), is the dramatic expansion of what constitutes a "disposal" from 1 January 2026. Previously, most taxpayers understood CGT to apply only to direct share sales. From 2026, a disposal includes any event causing cessation of ownership — specifically share redemptions, share conversions, company windings-up, and other ownership-terminating events. This means corporate actions like share buybacks, preference share redemptions, and capital reductions may now trigger capital gains tax Malaysia filing and payment obligations within 60 days.

Are listed Bursa Malaysia shares subject to capital gains tax?

No. Gains from disposing of shares listed on Bursa Malaysia are completely exempt from capital gains tax Malaysia. This exemption applies to all categories of taxpayers — companies, LLPs, trusts, and individuals. Only unlisted company shares fall within the scope of CGT Malaysia (and only when disposed of by companies, LLPs, trusts, or co-operatives). This means the stock market remains a tax-free capital gains environment for Malaysian investors in 2026.

How do I file the capital gains tax Malaysia return?

The capital gains tax Malaysia return is filed using the e-CKM form (Borang CKM) electronically via LHDN's MyTax portal at mytax.hasil.gov.my. A separate e-CKM must be filed for each individual disposal event. Both the return and the tax payment are due within 60 days of the disposal date. A Tax Identification Number (TIN) and Digital Certificate are required to access the CGT filing system. Unlike corporate income tax, CGT disposals are not included in the entity's annual tax estimate or annual return — the 60-day filing is entirely standalone. Engage a tax firm in Malaysia for assistance with complex disposals.

Is capital gains tax Malaysia the same as RPGT?

No — capital gains tax Malaysia (CGT) and Real Property Gains Tax (RPGT) are entirely separate taxes. RPGT, established in 1976, taxes gains from disposing of real property (land and buildings) and applies to all categories including individuals. CGT, introduced in 2024, taxes gains from disposing of unlisted company shares — and currently applies only to entities (companies, LLPs, trusts, co-ops), not to individual shareholders. RPGT uses a different form (CKHT 1A/2A), different rates (0–30% based on holding period), and a separate system. Both have a 60-day filing deadline but are otherwise entirely independent frameworks.

Final Word: Capital Gains Tax Malaysia Has Fundamentally Changed Corporate Transactions

Capital gains tax Malaysia is no longer simply a tax on share sales. Since 1 January 2026, it is a tax on any event that causes a corporate entity to cease owning unlisted shares — including redemptions, conversions, and liquidation distributions. Every Sdn Bhd director, company shareholder, LLP partner, and trustee involved in any corporate transaction involving unlisted shares needs to assess whether CGT obligations arise and whether the 60-day filing deadline applies.

The 10% vs 2% rate choice, the pre-2024 acquisition cost rules, and the exemption landscape (IPO, group restructuring, unit trusts) all require careful analysis specific to each transaction. Given that the CGT regime operates on a self-assessment basis — where you compute your own liability, file within 60 days, and pay — errors are entirely your responsibility and subject to LHDN audit.

If your company, LLP, or trust holds unlisted shares in any Malaysian company and has any plans for corporate restructuring, share buy-backs, capital reductions, or exits in 2026 — the time to get professional capital gains tax Malaysia advice is before the transaction, not after.

👉 Talk to KC Group's licensed tax professionals for capital gains tax Malaysia advice, rate optimisation, exemption eligibility, and e-CKM filing →

Capital Gains Tax Malaysia — Get It Right From Transaction Day One

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