On 29 September 2026 the Inland Revenue Board of Malaysia (HASiL) issued the second edition of its guideline on the tax treatment of gains from the disposal of foreign capital assets received in Malaysia, the Garis Panduan Layanan Cukai Atas Keuntungan Daripada Pelupusan Aset Modal Asing Yang Diterima Di Malaysia Dari Luar Malaysia (Pindaan). It replaces the first edition dated 27 March 2024, as amended on 26 April 2024, and HASiL announced it on its portal the same day.
If your company sells a building, a machine, shares in a foreign company or any other asset located outside Malaysia, and brings the proceeds home, this is HASiL’s current explanation of how that gain is taxed and of the exemption that can apply to it.
This article covers companies, limited liability partnerships, trust bodies and co-operatives. It is the companion to our article on the domestic capital gains tax guideline for unlisted shares, revised on 21 September 2026. The two regimes are separate: that guideline is about shares in Malaysian companies, this one is about gains that arise abroad and are received here.
The rule that has not changed
Since 1 January 2024, gains from the disposal of a foreign capital asset received in Malaysia by a resident company, LLP, trust body or co-operative are income under paragraph 4(aa) of the Income Tax Act 1967 (ITA) and taxed at the prevailing rate (paragraphs 5 and 6.1). The test is the date of disposal, not the date of receipt: a building sold on 1 October 2023 with the proceeds received in Malaysia on 1 February 2024 is outside the tax, and one sold on 15 January 2024 is inside it, whenever the money arrives (paragraph 6.2 and Examples 1 and 2).
“Received in Malaysia” means transferred or brought into Malaysia in cash or by electronic funds transfer, and paragraph 4.9 defines electronic funds transfer widely enough to cover bank transfers, payment cards, e-money, privately issued digital assets such as crypto-assets and stablecoins, and central bank digital currency.
Paragraph 6.3 gives examples of foreign capital assets: immovable property physically located outside Malaysia; movable property such as machinery, vehicles, fixtures, paintings and plant located outside Malaysia; intellectual property rights located outside Malaysia and owned or licensed by a Malaysian resident; and shares in a company incorporated outside Malaysia that are not subject to any provision of the ITA.
1. The exemption now runs to 31 December 2030
Section 8 of the 2024 edition said gains received in Malaysia were eligible for exemption from 1 January 2024 to 31 December 2026 if the prescribed economic substance conditions were met. Section 8 of the 2026 edition says the exemption runs from 1 January 2024 to 31 December 2030, and refers to either the participation exemption conditions or the economic substance conditions.
The instrument behind the new date is the Income Tax (Exemption) (No. 3) Order 2024 (Amendment) Order 2026, P.U.(A) 275/2026, made on 10 July 2026 and gazetted on 29 July 2026. Paragraph 2 of that Order replaces “31 December 2026” with “31 December 2030” in subparagraph 1(2) of the principal Order, P.U.(A) 75/2024. Paragraph 2 comes into operation on 1 January 2027. The principal Order as it stands today still reads to 31 December 2026, and the extension takes legal effect on the day after that period ends. There is no gap, but a company planning a disposal in 2027 or later is relying on an amendment that is gazetted and not yet in operation.
The same Order also makes a wording change, already in force, to the exemption itself. Subparagraph 2(1) of the principal Order previously exempted gains “arising from outside Malaysia which is received in Malaysia”; it now reads gains “which is received in Malaysia from outside Malaysia”. The guideline’s own title changed the same way.
2. The participation exemption is for unit trusts, not companies
Section 8’s opening sentence reads as if companies have a second route. The table in paragraph 8.1.1 assigns the routes by taxpayer:
- Companies, LLPs, trust bodies and co-operatives, under P.U.(A) 75/2024: the economic substance conditions only. Employ an adequate number of employees with the necessary qualifications to carry out the specified economic activity in Malaysia, and incur an adequate amount of operating expenditure to carry it out in Malaysia.
- Unit trusts, under P.U.(A) 250/2024: either the participation exemption (the income has been subject to tax in the country of origin, and the headline tax rate there is not less than 15%) or the economic substance conditions, applied to the unit trust management company.
The unit trust material is new to this edition: paragraphs 4.12 and 4.14 define a unit trust management company and a unit trust, paragraph 3.2 adds the unit trust Order and its 2026 amendment (P.U.(A) 270/2026, which also moves the unit trust exemption to 31 December 2030 from 1 January 2027), and Examples 6 and 7 work through a fund that qualifies and one that does not. For a trading or investment holding company, none of that material applies; the substance conditions are the route.
3. Paragraph 6.4: the gain is treated as net income on receipt
This is the change that bears on the tax computation for a company that does not qualify for the exemption, or that chooses not to claim it.
The 2024 edition’s paragraph 6.4 said that in determining the taxable gain, expenditure incurred wholly and exclusively on the acquisition and disposal of the capital asset was allowable under paragraph 65E(2) of the ITA, and gave examples: legal fees, valuer’s fees, advertising, and expenditure to enhance or preserve the asset’s value.
The 2026 edition’s paragraph 6.4 replaces that with two sentences. Foreign income brought into and received in Malaysia is net income. Therefore no further expenses may be allowed once that net income is received in Malaysia.
The guideline does not say how a company should arrive at the figure it reports when it has incurred foreign legal fees, agent’s commission or similar costs on the disposal, and it does not say what happens to a computation that followed the 2024 wording for a 2024 or 2025 disposal. Those are questions for your adviser before the return is filed.
4. Intellectual property rights are outside the exemption, under the Order
The guideline lists intellectual property rights among the foreign capital assets in paragraph 6.3(c). The principal Order carves them out of the exemption. Paragraph 3(1) of P.U.(A) 75/2024 provides that gains or profits from the disposal of intellectual property rights are disregarded for the purpose of the exempted gains in subparagraph 2(1), where the company, LLP, trust body or co-operative is the owner or licensee of those rights. Paragraph 3(2) defines the rights widely: patents, utility innovations, copyright, trade marks and service marks, industrial designs, layout designs, secret processes, know-how, geographical indications, plant variety protection, and similar rights, registered or not. Neither 2026 amendment Order touches paragraph 3.
So a Malaysian company that sells a foreign patent or trade mark and brings the proceeds home should not assume the substance exemption covers the gain. The guideline does not mention this carve-out.
5. Smaller changes
- Labuan entities are named. Section 5 now says the chargeable persons include Labuan entities that elect to be taxed, or are subject to tax, under the ITA. The 2024 edition listed the four categories of person without that sentence.
- Foreign tax credit claims. Paragraph 7.3 now states that a tax credit for a year of assessment must be claimed within two years after the end of that year, and refers readers to Public Ruling No. 3/2026 on bilateral and unilateral credit, issued on 22 May 2026. The two-year written claim for bilateral credit was already in paragraph 10.3 of the 2024 edition and remains there. Examples 3 and 4 now state expressly that a double taxation agreement exists with the foreign country.
- Definitions. “Capital asset” in paragraph 4.1 now reads movable or immovable property located outside Malaysia, and the definitions of bilateral and unilateral credit in paragraphs 4.6 and 4.7 are reworded to follow sections 132 and 133 of the ITA.
- Who sets the conditions. Paragraph 1.4 now says the exemption is subject to conditions set by the Minister of Finance, where the 2024 edition pointed to P.U.(A) 75/2024 directly.
What did not change
The substance conditions and HASiL’s explanation of them are carried over with only wording changes:
- There is no numerical threshold. Paragraph 8.1.2 says the minimum level is decided on the facts of each case, taking into account the number of employees for the type of activity, whether they are full-time or part-time, and whether office premises are used and adequate for the activity.
- For an investment holding entity, the specified economic activity is holding and managing its equity participations in other entities, or making the necessary strategic decisions on assets it acquires, holds or disposes of and managing and bearing the principal risks on them. For any other entity it is the business operations carried on (paragraph 8.1.3).
- A director counts as an employee only if a service director employed under a contract of service. A non-service director does not (paragraph 8.1.4).
- Outsourcing the activity is permitted if the five conditions in paragraph 8.1.5 are met: the activity is carried out in Malaysia; the company exercises adequate monitoring and control; the outsourcing entity charges for it, subject to transfer pricing rules; its qualified employees and operating expenditure are commensurate with the activity; and there is no double counting where it serves more than one client. Example 8 is an investment holding company with no employees that qualifies through an outsourced manager on these terms.
- The exemption does not apply to a resident carrying on banking, insurance, sea transport or air transport (paragraph 1.5 and paragraph 4 of the Order).
- Reporting is required even where the gain is exempt. Paragraph 9.2 requires the type and amount of foreign income, the country it arose in, the foreign tax charged, and any further information HASiL specifies, to be reported in the income tax return. Paragraph 2(4) of the Order says the exemption does not relieve the company of any obligation to file a return or furnish information.
- Records showing that foreign tax was charged must be kept under sections 82 and 82A, and the paragraph 9.2 details must be kept for audit (section 10).
What to do now
If you are planning to sell a foreign asset and bring the proceeds home: confirm the disposal date, because that is the date that decides whether the gain is in scope, and confirm that the substance conditions will be met in the basis period in which the proceeds are received. Example 7 is a fund whose manager performed only administrative functions in Malaysia, with investment decisions made abroad and minimal operating expenditure here; it was taxed in full.
If the asset is intellectual property: read paragraph 3 of P.U.(A) 75/2024 before assuming the exemption applies.
If you have claimed, or intend to claim, acquisition or disposal costs against the gain: the 2026 edition no longer describes that deduction. Take advice on the computation before filing.
If you are relying on the 2030 date for a disposal after 2026: the amendment is gazetted, and paragraph 2 of it comes into operation on 1 January 2027.
In every case: report the gain in the return, with the country, the amount and the foreign tax, whether or not you claim the exemption, and keep the evidence of foreign tax and of the substance conditions. Where foreign tax was paid, the credit claim has a two-year window.
Gains on unlisted shares in Malaysian companies are outside this guideline and are covered by HASiL’s separate capital gains tax guideline, revised on 21 September 2026.
If you would like help confirming whether your company meets the economic substance conditions, or working through the computation for a planned disposal, we can work through it with you.
Sources: Inland Revenue Board of Malaysia (HASiL), Garis Panduan Layanan Cukai Atas Keuntungan Daripada Pelupusan Aset Modal Asing Yang Diterima Di Malaysia Dari Luar Malaysia (Pindaan), 29 September 2026, paragraphs 1 to 11, compared with the edition dated 27 March 2024 as amended 26 April 2024; Income Tax (Exemption) (No. 3) Order 2024, P.U.(A) 75/2024; Income Tax (Exemption) (No. 3) Order 2024 (Amendment) Order 2026, P.U.(A) 275/2026; Income Tax (Unit Trust in relation to Income Received in Malaysia from Outside Malaysia) (Exemption) 2024 (Amendment) Order 2026, P.U.(A) 270/2026; HASiL guidelines, public rulings, practice notes and announcements indexes. All retrieved 6 October 2026. This article is general information current as at 6 October 2026 and is not tax or legal advice. HASiL’s 14 August 2026 release states that Budget 2027 is scheduled for October 2026, so confirm the live position on hasil.gov.my before acting.