Crowe Chat Vol.3/2026

Tax Edition

Welcome to our Crowe Chat Vol.3/2026. In this issue, we will cover the following topics:

Practice Note (PN) 1/2026 - Tax Treatment for Reporting Distributions from Retail Money Market Fund (RMMF)
PN 2/2026 - Tax Treatment for Unit Holders of Real Estate Investment Trust (REIT) or Property Trust Funds (PTF) from the year of assessment (YA) 2026 onwards
Public Ruling (PR) 1/2026 - Tax Incentive for Returning Expert Programme
Operational Guidelines 2/2026 - Real Property Gains Tax

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PN 1/2026

Tax Treatment for Reporting Distributions from Retail Money Market Fund (RMMF)

Introduction

An RMMF is a low‑risk unit trust fund that invests in short‑term debt instruments, offering stable returns and high liquidity as an alternative to savings accounts. From 1 January 2022, withholding tax (at the rate of 24%) under Section 109DA applies to interest distributions by RMMFs to non‑individual unitholders, which were previously exempt under Paragraph 35A of Schedule 6 of the Income Tax Act 1967.

New PN

The IRBM issued PN 1/2026 - Tax Treatment for Reporting Distributions from RMMF on 27 February 2026 to clarify the tax treatment for unit holders of unit trusts (“unit holders”) who received income distributions from an RMMF unit trust.

Highlights of the NEW PRThe salient points are as follows:

Tax Treatment for Unit Holders of an RMMF Unit Trust:

Category of Unit Holder	Income Distributed by the Unit Trust
Individual unit holders	Tax-exempt
Non-resident unit holders other than individuals	Subject to withholding tax under Section 109DA, which is a final tax
Resident unit holders other than individuals	Subject to withholding tax under Section 109DA, which can be claimed as tax credits against their tax payable

The PN prescribes and seeks to standardise the format and terminology used in the profit distribution vouchers of unit trust funds, including RMMFs, to facilitate easy reference by unit holders. The prescribed format for the profit distribution voucher fields is set out below.

The “Taxable Income” field represents the unit trust income distributed by an RMMF to its unit holders. This amount is the gross income that is taxable in the hands of non‑individual unit holders.
Where withholding tax (WHT) has been deducted, the amount of WHT deducted should be disclosed as a separate line item at the bottom of the table, to facilitate claims for tax credit under Section 110(9A) of the Income Tax Act 1967 by resident non‑individual unit holders.

PN 2/2026

Tax Treatment for Unit Holders of REIT or PTF from the YA 2026 onwards

Introduction

For the YA 2025 and prior YAs, income distributed by REITs or PTFs to unit holders other than resident companies, consisting of individuals, non-resident companies, foreign institutional investors and others were subject to WHT at the rate as prescribed under Part X, Schedule 1 of the Malaysian Income Tax Act, 1967 (MITA) as follows:

Category of Foreign Unit Holders	Withholding Tax Rate (Final Tax)
Unit holders other than resident companies	10% WHT from the YA 2020 until YA 2025
Non-resident companies	24% WHT commencing from the YA 2016
Foreign institutional investors	10% WHT from the YA 2020 until YA 2025

New PN

The IRBM issued PN 2/2026 - Tax Treatment for Unit Holders of REIT or PTF from the YA 2026 onwards on 18 March 2026 to explain the tax treatment of income distributions from REITs or PTFs with effect from YA 2026, following the cessation of Subparagraphs 1(a) and (c) of Part X, Schedule 1 of the ITA.

New Tax Treatment From YA 2026 Onwards

Commencing from the YA 2026, REITs or PTFs must classify their unit holders into “Resident Unit Holders” and “Non-resident Unit Holders”.

Resident Unit Holders

Unit holders shall report the profit distributions from REITs or PTFs in their tax returns, and subject to their respective tax rates, as follows:

Resident Unit Holders	Applicable Tax Rates
Individuals	0% - 30% on chargeable income
Companies	24% (prevailing corporate tax rate) - no change
Other unit holders	0% - 30% on chargeable income

Non-Resident Unit Holders

Companies shall continue to be subject to withholding tax of 24% which is a final tax. On the other hand, unit holders other than companies will not be subject to WHT, but are required to report the distribution of profits in their respective tax returns:

Non-Resident Unit Holders	Tax Rate
Individuals, foreign institutional investors and others	30% on chargeable income
Companies	24% WHT (final) - no change

PR 1/2026

Tax Incentive for Returning Expert Programme

Introduction

The Returning Expert Programme is administered by Talent Corporation Malaysia Berhad (TalentCorp), a government agency, from 1 January 2011 in accordance with the law applicable to an individual whose employment commences on or after 1 May 2011. Individuals who have been approved under the Returning Expert Programme are eligible to enjoy preferential tax at a flat rate of 15% on chargeable income from employment for a period of five (5) consecutive YAs starting from the first YA chosen by the individual.

Previous PR

The previous PR2/2018 - Tax Incentive for Returning Expert Programme was issued on 2 May 2018.

Updated PR

The IRBM issued an updated PR1/2026 - Tax Incentive for Returning Expert Programme on 16 March 2026.

Details of the Updated PR

PR 1/2026 replaces and updates PR2/2018 with some changes, including:

The deadline for application of the Returning Expert Programme has now been updated to 31 December 2027 to reflect the legislative changes made in Income Tax (Determination of Approved Individual and Specified Year of Assessment under the Returning Expert Programme) (Amendment) Rules 2024.
This updated PR includes the situation where an individual who has been approved for the Returning Expert Programme incentive establishes a company and acts as a director of the company and receives employment income, the approved incentive continues to apply in respect of the employment income provided that the business activities are in line with his expertise and the company is resident in Malaysia.

Operational Guideline 2/2026

Real Property Gains Tax (RPGT)

Introduction

The Self-Assessment System for RPGT was introduced from 1 January 2025. Under this system, the disposer is required to determine the taxable gains and calculate the tax payable in the RPGT Return Form and make the RPGT payment within the prescribed period. No assessment notice will be issued as the RPGT Return Form submitted to the Director General of IRBM will be treated as the assessment notice.

Previous Guideline

The previous Operational Guideline 2/2025 - RPGT was issued on 13 January 2025.

Updated Guideline

The IRBM issued an updated Operational Guideline 2/2026 - RPGT on 17 March 2026.

Details of the Updated Guideline

The notable changes which are effective from 1 January 2026 are as follows:

An additional option is given to the acquirer to retain and remit an amount equivalent to the deemed assessed amount to the Director General of IRBM. The acquirer must make a choice on the amount to be remitted which include:
- The full consideration; or
- The 3% / 5% / 7% retention sum (depending on the category of disposer); or
- Equivalent to the deemed assessed amount (if the notification of the deemed tax amount is informed by the disposer to the acquirer before the remittance is made),
Whichever is lesser.
Taxpayers are allowed to make tax payments on deemed assessments in installments based on the amount and installment period determined by the IRBM.