Discussion on the key proposals under the Finance Bill 2025 and the Measures for the Collection, Administration and Enforcement of Tax Bill 2025 who will be most affected, what new powers tax authorities will have, how changes to major tax laws will impact key sectors, and what businesses and high-net-worth individuals should start doing to prepare.
00:00Over the coming months, Malaysia's tax landscape is set for another major reset.
00:04The Finance Bill 2025 and the new measures for the collection, administration and enforcement of Tax Bill 2025
00:11will not only tweak existing laws but could change how tax is assessed, collected and enforced for individuals, SME and even large corporations alike.
00:20Today we break down what's really changing, who will feel it the most and what business and high net worth individuals should be doing now
00:27before these provisions kick in. Ready with me in the line to discuss further is Tenish Karnal, Executive Director at ProTax.
00:35I want to say thank you very much, Tenish, for joining me.
00:38Firstly, what are the most significant changes proposed under the Finance Bill 2025
00:43and the measures for the collection, administration and enforcement of Tax Bill 2025?
00:50And most importantly, who will be most affected, individuals, SME or even large corporates?
00:57Good morning, Nina. The biggest impact is on capital gains tax.
01:02Of course, in addition to the 2026 budget proposals, which were already announced on 13 October,
01:09there are additional measures in the Finance Bill and the measures for collection, admin and enforcement tax bill.
01:15And I would regard the most key in relation to capital gains tax, whereby it has been clarified that liquidation, winding up, striking off of a company
01:27is in scope for CGT filing and CGT exposure.
01:33And number two, preference share is, you know, an increasing trend both among startup companies as well as for interco transactions.
01:43So now, redemption of preference share is in scope for capital gains tax.
01:50And even conversion of preference shares into ordinary shares is in scope for capital gains tax.
01:59So those are some of the major updates on capital gains tax.
02:03The other aspect is a nominee shareholder.
02:06So as we know, capital gains tax applies only when the disposer is a company, limited life-dirty partnership, trust body or cooperative society.
02:16But we have a lot of situations where the legal owner is an individual, but he's acting as a nominee for a company.
02:23So the Finance Bill changes clarify that in such situation, capital gains tax will apply because we look at the beneficial owner being the company,
02:34despite the legal or nominee owner being an individual.
02:38So those are some changes on the Income Tax Act in relation to capital gains tax.
02:43Another key change is in relation to RPGT, real property gains tax, whereby in the past, losses arising from disposal of real property were allowed to be carried forward indefinitely.
02:56Now a 10-year time limit has been set.
03:00In line with the time limit for Income Tax Act, RPGT Act also has a 10-year time limit for carry forward of losses.
03:07After that, the losses will be disregarded.
03:10There's also another simplification measure on RPGT, whereby following the spirit of self-assessment,
03:19if the disposer of a real property files the RPGT return within 60 days,
03:27they're able to notify the acquirer to reduce the withholding tax amount to the actual tax amount,
03:34so that we can avoid instances of refund and better cash flow and so on and so forth.
03:43All right, that's some of the updates from the income tax, also the capital gains,
03:47or we can also, one of the other tax was nominated, shareholder tax.
03:52But maybe share with us, Tanish, when will all of these changes take effect?
03:56And are there any transitional provisions that taxpayers should be especially aware of?
04:04Okay, the changes that I described earlier applies either from 1st January 2026 or YA 2026,
04:12depending on the exact nature of the change.
04:14There's one more change, which is for corporate tax installments, corporate income tax installments.
04:19You know, we now pay the installments from the second month of the year until the first month of the following year.
04:28There is an effort to streamline that so that all installments will be within the same financial year.
04:36For that measure alone, the effective date will be from YA 2027,
04:42and YA 2027 is a transition year with 11 installments,
04:46and subsequently to become 12 installments within the same financial year.
04:52All right, that is the expected date from 2026 to 2028.
04:56Tanish, what are some of the new powers or tools being given to the tax authorities
05:00under the Collection Administration and Enforcement Bill,
05:03and how might this change the compliance and audit landscape for taxpayers?
05:09One of the important changes is in relation to stamp duty.
05:12stamp duty is on a self-assessment system from 1st January 2026.
05:18This was already passed in the Finance Bill table in end of 2024, right?
05:24This exchange was enacted a year ago.
05:27What the stamp duty self-assessment system means is there's a lot of responsibility
05:30for duty payers, industry players, to assess the nature of document,
05:36the right type of duty before submitting for adjudication or something.
05:40Now, what happened in the Finance Bill or the Collection Administration
05:44Enforcement Bill table in the Parliament last week
05:48is streamlining of penalties in relation to stamp duty
05:53in order to ensure that duty payers and industry payers
05:57do not take responsibility under the self-assessment regime lightly.
06:01And we know this is the amendment is for to streamline and align and increase efficiency.
06:09How will the amendments to the Income Tax Act, Real Property Gains Tax,
06:12Stamp Act, Labuan Business Act Act, and Petroleum Income Tax Act
06:16impact key sectors such as property, labuan or offshore businesses, and oil and gas?
06:22Okay, this measure is quite meant to have across the broad impact
06:31with regard to compliance level for stamp duty.
06:36RPGT and capital gain tax is specific for persons involved in capital transactions,
06:44and it has an impact across all sectors.
06:51Help us understand from this tune you build.
06:55Do this proposal broaden the tax base, increase the effective tax burden,
07:00or mainly tighten enforcement, and how fair are these changes
07:03across different income and business groups can understand all of this?
07:06Okay, for the main changes in relation to CGT and RCGT,
07:11actually, if you look at the explanatory notes,
07:15it's been characterized as a clarification in nature.
07:20So it is to further strengthen the views that IRB has always had,
07:25and it's meant to bring about clarity rather than a new policy.
07:32All right, we know that this year we are the ASEAN men's chairmanship.
07:39Take a look at the regional prospect.
07:43Maybe you can share with us what are the likely implications of this tax changes
07:47on Malaysia's investment climate and even competitiveness,
07:51especially compared to other ASEAN jurisdictions.
07:54Okay, so this just simply means that inbound investors have to be more conscious
08:02about the potential exit tax implications at the time of making the transaction investment.
08:11None of these measures are exceptional or something that are not present in other countries.
08:18in line with the norm, it simply means there are more factors that have to be taken into account
08:25when making investment decisions, transactions, and so on.
08:30So far, there are more factors to take into account,
08:34nothing that falls out of the norms from an international point of view.
08:41Lastly, practically, Tanish, what should businesses and high-net-worth individuals start doing now
08:49to review their structure, manage risk, and even prepare for the implementation of these bills?
08:54If you have to start to plan in advance for capital transactions such as disposal of shares
09:01or even issuance of new preference shares, subscribing to preference shares,
09:08redeeming, converting preference shares, disposal of properties,
09:13even acquisition of properties, you have to think about the tax implications
09:15at the time of making the investment.
09:18So advance prep is needed for capital transaction,
09:20and as part of that, DOT has an impact on all areas of the business.
09:26I would say as simple as signing an NDA to an employment contract
09:34to a large-scale merger acquisition transaction.
09:40All right, definitely, I want to say thank you very much, Tanish,
09:43for helping us understand the Finance Bill 2025 and the new tax enforcement
09:46and what it means for taxpayers, and how will we change tax in Malaysia moving forward.
09:51Again, I would say thank you very much to Executive Director at Tratax Sudian Berhad,
09:54and all of our discussion here will be featured in astrawani.com
09:57and across all social media platform.
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