For unlisted shares, which capital gains tax rate applies: 10% of the gain or 2% of the price?
Shares acquired before 1 January 2024 can be taxed at the disposer's choice of 10% of the chargeable gain or 2% of the gross disposal price. Shares acquired on or after 1 January 2024 are taxed only at 10% of the gain.
The two-rate system exists to protect owners who bought shares before the tax started.
Shares acquired before 1 January 2024: the company can elect either:
- 10% of the chargeable gain (disposal price less cost and allowable expenses), or
- 2% of the gross disposal price.
Shares acquired on or after 1 January 2024: 10% of the chargeable gain only. The acquisition date decides: only shares acquired before 1 January 2024 qualify for the 2% option (Schedule 1, Part XXI).
Which is better? If the gain is small, the 10% on the actual gain is lower. If the gain is large relative to price, the 2% route can cost less. Example: shares sold for RM1,000,000 that cost RM600,000 give a gain of RM400,000, so 10% is RM40,000 against 2% of price at RM20,000. Shares sold for RM1,000,000 that cost RM950,000 give a gain of RM50,000, so 10% is RM5,000 against RM20,000 under the 2% option.
Losses: if there is a loss, the 10% route is normally chosen, and the loss can be tracked against future capital gains.
The election is made when filing the return, so keep acquisition records. Confirm current LHDN guidance before electing.
Legal basis
- Income Tax Act 1967, Schedule 1, Part XXI, paragraphs (a) and (b)
Sources
Applies to YA 2024 onwards · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- Can a company with foreign shareholders still get the SME tax rate in Malaysia?Only if foreign ownership stays at 20% or below. The SME rates also need paid-up ordinary capital of RM2.5 million or less and gross business income of RM50 million or less. If more than 20% of the ordinary capital is held, directly or indirectly, by foreign companies or non-citizen individuals at the start of the basis period, all income is taxed at 24%.
- Does capital gains tax apply when a company sells unlisted shares in Malaysia?Yes, for disposals from 1 March 2024. Companies, LLPs, trust bodies and co-operatives pay capital gains tax on gains from unlisted shares in Malaysian companies. Individuals are not covered. The return and payment are due within 60 days of disposal.
- What is the corporate tax rate for a small company in Malaysia?A Malaysian resident company normally pays 24% income tax. A company that meets the SME conditions pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (up to RM600,000), and 24% on anything above that.
- What conditions must my company meet to get the SME tax rates in Malaysia?To use the lower 15%/17% rates, the company must be resident, have ordinary paid-up capital of RM2.5 million or less, and gross business income of RM50 million or less. It must also pass the related-company test and, from YA 2024, a foreign-ownership test.
- Does a dormant company with no income still have to file a tax return in Malaysia?Yes. LHDN says companies that are dormant or have not started business must still register a tax file and file returns. A nil return tells LHDN there is no taxable income, and failing to file can be an offence even when no tax is due.