Malaysia’s Ministry of Finance (MoF) announced gazette orders exempting capital gains tax (CGT) on the capital gains or profits from the sales of shares during company restructuring and initial public offering (IPO) restructuring activities.

The Income Tax (Restructuring of Companies) (Exemption) Order 2024 (Exemption Order) and the Income Tax (Initial Public Offering) (Exemption) Order 2024 (Exemption Order) were gazetted on 8 October 2024.

This exemption is effective from 1 March 2024 to 31 December 2028.

Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024 (PU(A) 289/2024)

The Minister exempts a company, limited liability partnership, trust body or co-operative society from the payment of income tax in respect of chargeable income from gains or profits received from the disposal of shares of a company incorporated in Malaysia which is not listed on the stock exchange to an acquirer company, a company resident in Malaysia; subject to the following conditions:

  • the shares shall be disposed of under a scheme for restructuring of companies in the same group to increase efficiency in the operation of the company, limited liability partnership, trust body or co-operative society, or the acquirer company or both; and
  • the consideration for the disposal of shares shall consist of shares in the acquirer company or not less than 75% of shares in the acquirer company and the balance of a money payment. The shares shall be issued to the company, limited liability partnership, trust body or co-operative society;
  • the company, limited liability partnership, trust body or co-operative society shall apply in writing to the Director General of the Inland Revenue Board of Malaysia (IRB) after the period of three years from the date of the disposal of shares by the company, limited liability partnership, trust body or co-operative society.

Income Tax (Initial Public Offering) (Exemption) Order 2024 (PU(A)290/2024)

The Minister exempts a company, limited liability partnership, trust body or co-operative society from the payment of income tax in respect of chargeable income from gains or profits received from the disposal of shares of a company incorporated in Malaysia which is not listed on the stock exchange, subject to the following conditions:

  • the shares shall be disposed of in relation to the restructuring of any company for an initial public offering;
  • the company, limited liability partnership, trust body or co-operative society shall apply for the initial public offering under the Capital Market and Services Act 2007 [Act 671] within the period of one year from the date of the disposal of shares—
    • to the Securities Commission for the purpose of listing on the Main Market; or
    • to Bursa Malaysia Securities Berhad for the purpose of listing on the ACE Market and LEAP Market; and
  • the company, limited liability partnership, trust body or co-operative society shall obtain the approval for applying the initial public offering on or before 31 December 2028;
  • The company, limited liability partnership, trust body or co-operative society shall apply in writing to the Director General of the Inland Revenue Board of Malaysia (IRB) within the period of one year from the date of approval for the application of the initial public offering.