Taxes on possession and operation of real estate
Quit rent
No specific tax is levied on property owners. However, individual state governments levy a land tax known as “quit rent” or cukai tanah which is payable yearly to state authorities. The rate varies with land category and size, but in general the annual quit rent liability is less than RM100 on a residential property.

Assessment
Properties within local authorities’ boundaries are also required to pay an “assessment” or cukai pintu. This tax is calculated as a percentage of annual rental value, therefore varying with the property type and the location of the property, multiplied by a set of rates determined by local authorities. In general, residential units assessment tax is calculated at a rate of 4 percent of the annual rental value, payable in two instalments per annum.

Taxes on acquisition and transfer of real estate
Stamp duty and legal costs
The stamp duty payable by purchasers of property is based on the higher of the money value of the consideration or current market value, and varies from 1 percent to 3 percent.
Legal fees for sales, purchases or other forms of conveyances for completing any transaction involving immovable properties are fixed at rates based on the consideration or adjudicated value:

Capital gains tax
Capital gains are generally not subject to income tax in Malaysia. However, real property gains tax (RPGT) is levied on chargeable gains arising from the disposal of real property situated in Malaysia, or on any interest, option or other rights in or over such land, as well as the disposal of shares in real property companies.

For non-resident individuals, an RPGT rate of 30% applies to disposals of property within five years of the acquisition date, while a rate of 5% applies to disposals in the sixth year or later.

For foreign companies, the RPGT rates are as follows:

• Disposal within two years after the date of acquisition: 30%
• Disposal in the third year after the date of acquisition: 20%
• Disposal in the fourth year after the date of acquisition: 15%
• Disposal in the fifth year after the date of the acquisition or thereafter: 5%

Goods and Services Tax
As the sale and letting out of residential properties are exempt, a person is liable to be GST- registered only if the annual turnover from letting out commercial property and, in some circumstances, the disposal of commercial property exceeds RM500,000. 

Personal Tax
The rate of personal tax depends on the individual’s resident status, which is determined by the duration of their stay in Malaysia. Generally, an individual who is in Malaysia for at least 182 days in a calendar year is regarded as a tax resident.

Tax treaties: Avoidance of double taxation
Malaysia has effective Double Taxation Agreements with 70 different countries which seek to avoid double taxation by defining the taxing rights of each country with regard to cross border flows of income and providing for tax credits or exemptions. The full list of countries can be found at the Malaysian Investment Development Authority website the Malaysian Investment Development Authority website.

More details on taxation can be obtained at www.mida.gov.my and www.hasil.gov.my

Source: Jones Lang Lasalle Malaysia Property Investment Guide 2015

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