Crowe Chat Vol.6/2025

Tax Edition

Welcome to our Crowe Chat Vol.6/2025. In this issue, we will cover the following topics:

Capital Gains Tax (CGT) – Guidelines on Capital Gains Tax for Unlisted Shares
Group Relief – Public Ruling (PR) 2/2025 : Group Relief for Companies
Tax Audit Framework – Transfer Pricing Tax Audit Framework 2025

Download the PDF Booklet

Capital Gains Tax (CGT)

Guidelines on Capital Gains Tax for Unlisted Shares

Introduction

Effective 1 January 2024, CGT is imposed on gains from disposal of capital assets by companies, limited liability partnerships (LLPs), co-operative societies and trust bodies. Following the imposition of CGT in Malaysia, the Inland Revenue Board of Malaysia (IRBM) issued a guideline regarding the CGT on unlisted shares to provide guidance and clarifications on the imposition of CGT in respect of gains or profits derived by companies, LLPs, trust bodies, and cooperative societies, including Labuan entities that are subject to tax under the Malaysian Income Tax Act, 1967 (MITA) from the disposal of shares of an unlisted company incorporated in Malaysia (“unlisted shares”) and shares of a controlled company incorporated outside Malaysia that owns real property located in Malaysia or shares of another controlled company or both (“shares of relevant company”) under Section 15C of the MITA.

Previous Guideline

Garis Panduan Cukai Keuntungan Modal Bagi Saham Tidak Tersenarai (Available in Malay Language Only) dated 1 March 2024.

Updated Guideline

The IRBM issued Guidelines on Capital Gains Tax for Unlisted Shares on 21 July 2025 which replaces the version dated 1 March 2024.

Details of the Updated Guideline

The updated CGT Guideline clarifies that Chapter 9 of the MITA does not apply to gains or profits arising from the disposal of foreign capital assets that are received in Malaysia.
Example 9 has been inserted to explain the treatment of unabsorbed CGT losses which are to be utilised on a first-in-first-out basis.
Example 11 has been added to illustrate the timing to perform the 75% threshold test in determining whether the shares of the relevant company constitutes Section 15C shares.

Group Relief

PR 2/2025 - Group Relief for Companies

Introduction

Group relief is available to all companies incorporated and resident in Malaysia, subject to the terms and conditions as provided under Section 44A of the MITA. Effective YA 2009, subsection 44A(1) of the MITA is amended by Finance Act 2009 to allow a company in a group to surrender its current year adjusted business losses in the basis period for a year of assessment (YA) of not more than seventy percent (70%) to one or more claimant companies within the same group.

With effect from YA 2019, a surrendering company which has just commenced operations can only surrender current year adjusted business losses for the purpose of group relief to a claimant company up to a limit of three (3) consecutive YAs.

PreviousPR

PR 6/2016 - Group Relief for Companies dated 22 August 2016.

Updated PR

The IRBM issued PR 2/2025 - Group Relief for Companies on 31 July 2025 to replace PR6/2016.

Notable changes

PR 2/2025 is updated by incorporating the latest legislative changes which include:
- the time limit of three (3) consecutive YAs for surrendering current year adjusted business losses (New Examples 1 and 2 are inserted).
- the ineligibility of group relief to be claimed if in the same YA, the surrendering or claimant company still has unutilised investment tax allowances or unabsorbed pioneer loss after the investment tax allowance or pioneer status incentive period has ended (New Example 21 is inserted).
The definition of “operations” has been added in the new PR 2/2025, in line with the legislative changes, where the 3 consecutive YAs are computed from the YA when the surrendering company first commences “operations”. “Operations” in relation to a company, limited liability partnership, trust body or co-operative society means —
1. an activity which consists of the carrying on of a business;
2. an activity which consists wholly in the making of investments;
3. an activity which consists of both the carrying on of a business and the making of investments; or
4. an activity which consists of the making of investments prior to the commencement of a business or after the cessation of a business.

Tax Audit Framework

Transfer Pricing Tax Audit Framework 2025

Introduction

The Transfer Pricing Tax Audit Framework issued by the IRBM aims to ensure that the transfer pricing tax audit is carried out in a fair, transparent and impartial manner as well as outlines the rights and responsibilities of audit officers, taxpayers and tax agents.