[World Tax News] Malaysia Introduces Capital Gains Tax Exemption on Disposal of Unlisted Shares and More

Editorial Team – [2024] 167 taxmann.com 457 (Article)

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Malaysia introduces capital gains tax exemption on disposal of unlisted shares

Malaysia has issued the Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024 and the Income Tax (Initial Public Offering) (Exemption) Order 2024. These orders introduce the capital gains tax exemption on the disposal of unlisted shares, as initially announced in the 2024 Budget.

(a) Income Tax (Restructuring Of Companies Scheme) (Exemption) Order 2024

This order exempts a company, limited liability partnership, trust body or cooperative 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 that is not listed on the stock exchange to an acquirer company, a company resident in Malaysia.

For the purposes of the exemption, shares shall be disposed of within the period from 1 March 2024 to 31 December 2028 under a scheme for restructuring companies in the same group, 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.

Further, where the company, limited liability partnership, trust body or co-operative society incurs any loss from the disposal of shares referred to in paragraph 2 from 1 March 2024 to 31 December 2028, such loss shall be disregarded.

However, this order is not applicable to the disposal of shares of a company incorporated in Malaysia that is not listed on the stock exchange, where gains or profits from the disposal of shares are chargeable to tax as business income.

(b) Income Tax (Initial Public Offering) (Exemption) Order 2024

This order exempts a company, limited liability partnership, trust body or cooperative 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 that is not listed on the stock exchange.

For the purposes of exemption, the disposal of shares shall be made within the period from 1 March 2024 to 31 December 2028 in relation to restructuring of any company for an initial public offering and the company, limited liability partnership, trust body or co-operative society shall obtain the approval for the application of the initial public offering on or before 31 December 2028.

Further, Where the company, limited liability partnership, trust body or co-operative society incurs any loss from the disposal of shares from 1 March 2024 to 31 December 2028, such loss shall be disregarded.

However, this order shall not apply to the disposal of shares of a company incorporated in Malaysia that is not listed on the stock exchange, where gains or profits from the disposal of shares are chargeable to tax as business income.

Source: Income Tax (Restructuring Of Companies Scheme) (Exemption) Order 2024
Income Tax (Initial Public Offering) (Exemption) Order 2024

2. Canada publishes consultation on taxation of Vacant Land

In Budget 2024 and Canada’s Housing Plan, the federal government announced the most ambitious housing plan in Canadian history—a plan to build nearly 4 million new homes by 2031. To help achieve this ambitious target, the federal government is rolling out a suite of policies that will unlock more land for new housing development, including surplus, underused, and vacant public lands.

Budget 2024 announced that the government is considering a tax on residentially zoned vacant land to encourage private-sector landowners to develop their vacant land.

The federal government is undertaking this consultation to:

• Hear views from all stakeholders on the potential application of vacant land taxes, including feedback on their potential design and impacts; and,
• Gauge interest from provinces, territories, and municipalities on the potential introduction of vacant land taxes at the provincial, territorial, and municipal levels, with federal funding to support their implementation.

This consultation paper provides a general description of a vacant land tax base, such as lands to which such taxes could apply, followed by questions for all stakeholders and provinces, territories, and municipalities.

To meet shared objectives, federal support is envisioned for provincial, territorial, and municipal tax measures structured around a core tax base of land that is:

• Vacant;
• Residentially (or mixed-use) zoned;
• Serviceable by municipal infrastructure (e.g., roads, water, sewage, and electricity); and,
• Physically developable (e.g., appropriate lot size, no site contamination).

Submissions for this consultation will be open from October 8, 2024, until December 31, 2024

Source: Consultation by the Government of Canada

Click Here To Read The Full Article