Important taxation law changes in 2024 as introduced by the Finance (No. 2) Act 2023

1.       Stamp Duty

1. Stamp duty of RM 5.00 for every RM 1,000 will be payable on foreign currency loans and financing made according to syariah law in foreign currencies. The previous maximum stamp duty limit of RM 2,000 is abolished.
2. Stamp duty of RM 4.00 for every RM 100 of the consideration or market value, whichever is the greater, will be payable on a conveyance, assignment or transfer of any property (except stocks, shares, marketable securities and certain accounts receivable or book debts) to a foreign company or a person who is not a citizen and not a permanent resident of Malaysia.
    

2.       Capital Gains Tax

Effective 1 January 2024, capital gains tax will be imposed on gains made by companies, limited liability partnerships, trust bodies, and co-operative societies from disposal of:

1. Capital assets situated in Malaysia, i.e., shares in unlisted companies incorporated in Malaysia; or shares in foreign incorporated companies deriving value from real property in Malaysia.
2. Capital assets situated outside Malaysia, upon remittance into Malaysia

The rate of capital gains tax to be paid within 60 days of the date of disposal is as follows:

1. for the disposal of a capital asset situated in Malaysia acquired before 1 January 2024, the rate of 10% of the chargeable income from the disposal of the capital asset or 2% of gross on the disposal price of the capital asset;
2. for the disposal of a capital asset situated in Malaysia acquired on or after 1 January 2024, the rate of 10% of the chargeable income from the disposal of the capital asset;
3. for the disposal of other capital assets, the prevailing income tax rate applicable to the specified entity.

These provisions are effective from 1 January 2024, but are subject to the Income Tax (Exemption) (No. 7) Order 2023 which exempts a company, limited liability partnership, trust body or co-operative society from the payment of income tax in respect of any gains or profits received from the disposal of shares of a company incorporated in Malaysia not listed on the stock exchange made on or after 1 January 2024 to 29 February 2024.
 

3.       Tax Treatment for Micro, Small and Medium sized Companies

As an additional condition to qualify for the preferential tax treatment granted to micro, small and medium sized companies, not more than 20 % of the company’s paid-up capital in respect of ordinary shares at the beginning of the basis period for a year of assessment must be owned directly or indirectly by one or more companies incorporated outside Malaysia or individuals who are not Malaysian citizens.
 

4.       Double Tax Relief

Unilateral tax credit will no longer be available for income that is treated as derived from Malaysia under the Malaysian Income Tax Act that has suffered foreign tax from a country with which Malaysia has no double taxation agreement.