Insights · Malaysia Tax
Malaysia Capital Gains Tax on Unlisted Shares in 2026: How the 10% and 2% Rules Work
Since 1 January 2024, companies, LLPs, trust bodies and co-operative societies have paid capital gains tax in Malaysia when they dispose of shares in unlisted Malaysian companies; disposals up to 29 February 2024 were exempt. The rate is 10% of the chargeable gain. For shares acquired before 1 January 2024, the seller may instead pay 2% of the gross disposal price. The e-CKM return and the tax are both due within 60 days of the disposal. Individuals are not caught.
This guide is for directors and finance leads of holding companies and foreign groups that sell or reorganise Malaysian shareholdings. It covers which shares are caught, how to choose between the two rates, the 2026 changes, the exemptions still open and the 60-day filing rule.
| Rule | Position at 2 October 2026 |
|---|---|
| Who pays | Companies, LLPs, trust bodies and co-operative societies; not individuals |
| Shares caught | Unlisted shares in Malaysian companies, and shares in foreign controlled companies whose Malaysian real property is at least 75% of tangible assets |
| Start date | 1 January 2024; disposals to 29 February 2024 exempt, so tax applies from 1 March 2024 |
| Shares acquired from 1 January 2024 | 10% of the chargeable gain |
| Shares acquired before 1 January 2024 | 10% of the chargeable gain or 2% of the gross disposal price, at the seller’s option |
| Return and payment | e-CKM return and tax within 60 days of disposal (the date of a written agreement) |
| Losses | Set only against later capital gains; carried forward for 10 years of assessment |
| Foreign capital gains received | Taxed at the normal income tax rate; exempt to 31 December 2030 if economic substance is met |
Who pays, and which shares are caught
The tax sits in the Income Tax Act 1967 and is administered by the Inland Revenue Board of Malaysia (LHDN). It applies to companies, limited liability partnerships, trust bodies and co-operative societies, but not to individuals. A Labuan entity taxed under the Labuan Business Activity Tax Act 1990 is outside it unless it has elected to be taxed under the Income Tax Act. Any share in a Malaysian-incorporated company that is not listed on Bursa Malaysia is a chargeable asset.
Holding Malaysian land through a foreign company does not avoid it. Gains on shares in a foreign controlled company, meaning one with no more than 50 members controlled by no more than five persons, are treated as Malaysian where Malaysian real property, or shares in another controlled company, make up at least 75% of its total tangible assets. LHDN applies the test when the shares are acquired. Companies selling shares in Malaysian real property companies also pay capital gains tax, not real property gains tax.
The Finance Act 2025, gazetted on 31 December 2025, widened “disposal” from 1 January 2026. Beyond a sale or transfer, it now covers rights extinguished on a winding up, capital reductions, share conversions and redemptions, buy-backs and any other end of ownership. Disposals through a nominee are taxed on the beneficial owner. Group capital reductions and members’ voluntary liquidations therefore need a capital gains tax review before the board approves them.
How the 10% and 2% calculations work
The chargeable gain is the disposal price, less disposal costs and any spending that enhanced or preserved the shares’ value, minus the acquisition price and its incidental costs, such as legal and valuation fees. Between connected parties, or where a deal is not at arm’s length, LHDN substitutes market value. Its guidelines accept any reasonable valuation method for unlisted shares, including net tangible assets.
For shares bought before 1 January 2024, the 2% option is cheaper whenever the gain exceeds one-fifth of the gross price. Take a holding company that bought a Sdn Bhd in 2019 for RM2 million and sells it in 2026 for RM5 million, with RM100,000 of deal costs. At 10%, tax on the RM2.9 million gain is RM290,000; at 2% of the price, it is RM100,000. Had the shares cost RM4.5 million, 10% of the RM400,000 gain, or RM40,000, would be the cheaper basis.
Where there is a written agreement, the disposal takes place on the agreement date, not on completion. If government or state approval is needed, it is the date that approval and its conditions are satisfied. Each disposal needs its own return. Losses are ring-fenced: they reduce later capital gains only, not business income, and any unused balance lapses after 10 consecutive years of assessment.
Exemptions, foreign gains and what to watch
Two orders gazetted on 8 October 2024 exempt disposals made from 1 March 2024 to 31 December 2028. Under the restructuring order, P.U.(A) 289/2024, a sale of unlisted shares to a Malaysian-resident company in the same group qualifies where at least 75% of the consideration is shares in the acquirer and the rest is cash. The seller still files and pays within 60 days, then applies to LHDN for the exemption and a refund once three years have passed.
The initial public offering order, P.U.(A) 290/2024, covers pre-listing disposals where the listing application goes to the Securities Commission or Bursa Malaysia within one year of the disposal and approval is obtained by 31 December 2028; the claim follows within one year of approval. Qualifying unit trusts are exempt to 31 December 2028. A venture capital relief was announced in Budget 2024, but no gazetted order could be confirmed, so check with LHDN before relying on it.
Gains on disposals of assets outside Malaysia that a resident company receives in Malaysia are taxed at its normal income tax rate, 24% for most companies. They are exempt where the company has adequate qualified employees and operating expenditure in Malaysia, and P.U.(A) 275/2026, gazetted on 29 July 2026, extended that exemption to 31 December 2030. The tax is self-assessed, so the Income Tax Act’s penalties for late returns and late payment apply. Budget 2027, tabled on 9 October 2026, did not propose changes to this tax; any later change takes effect only once legislated.
A capital gains tax checklist for share disposals
- Before signing, confirm the seller is in scope and whether any foreign shares meet the 75% real property test.
- Diarise 60 days from the agreement date, not completion, for the e-CKM return and the payment.
- For shares acquired before 1 January 2024, compute both the 10% and the 2% basis.
- Keep evidence of acquisition and incidental costs, plus a valuation for connected-party sales.
- Review capital reductions, redemptions, buy-backs and liquidations from 1 January 2026 as possible disposals.
- For restructurings and IPOs, file and pay first, then diarise the exemption claim dates.
- Track capital losses separately; unused losses lapse after 10 years of assessment.
Frequently asked questions
Do individuals pay capital gains tax on shares in Malaysia?
No. Malaysia’s capital gains tax on unlisted shares applies only to companies, limited liability partnerships, trust bodies and co-operative societies. An individual selling shares in a private Malaysian company is outside it, and Bursa Malaysia-listed shares are not chargeable assets. Individuals selling shares in a company that mainly holds Malaysian land should check real property gains tax, which still applies to them.
When is the 2% capital gains tax option better than 10% in Malaysia?
The 2% option applies only to unlisted shares acquired before 1 January 2024, and it is charged on the gross disposal price, not the gain. It is cheaper whenever the chargeable gain exceeds 20% of the gross price. A company selling shares for RM5 million that cost RM2 million, with RM100,000 of deal costs, would pay RM100,000 at 2% against RM290,000 at 10%.
When must the capital gains tax return be filed in Malaysia?
The e-CKM return must be filed through LHDN’s e-Filing system within 60 days of the disposal, and the tax is payable by the same deadline. Where there is a written sale agreement, the disposal date is the agreement date, not completion, so the clock usually starts at signing. Each disposal needs its own return, even where a restructuring or IPO exemption will be claimed later.
Are foreign capital gains taxed in Malaysia?
Since 1 January 2024, gains on disposals of foreign capital assets by resident companies, LLPs, trust bodies and co-operatives are taxable when received in Malaysia, at the normal income tax rate. They are exempt if the recipient meets economic substance conditions in Malaysia, and an amendment order gazetted on 29 July 2026 extended that exemption to 31 December 2030.
Sources
Figures in this article were checked against these sources on 2 October 2026. Rates, fees and deadlines change, so confirm the current position with the authority before acting.
- Inland Revenue Board of Malaysia (LHDN), Guidelines on capital gains tax for unlisted shares
- Inland Revenue Board of Malaysia (LHDN), Capital gains tax return form filing programme
- Inland Revenue Board of Malaysia (LHDN), Guidelines on gains from disposal of foreign capital assets
- PwC Malaysia, Capital gains tax
- KPMG Malaysia, Capital gains tax: what do you need to consider
- EY Malaysia, Malaysia’s new capital gains tax regime: your questions answered
- EY Malaysia, Capital gains tax exemptions for IPOs and group restructuring
- KPMG Malaysia, Finance and Tax Bills 2025 highlights
