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Malaysia: Domestic Corporate Taxation

Capital Gains Tax on the Sale of Shares

Capital gains made by a "Malaysian Satay" (a resident Malaysian holding company wholly owned by an offshore Labuan parent corporation) on the profitable sale of its shareholding in a foreign subsidiary are free of all taxes in Malaysia.

(N.B. Capital gains made by a resident Malaysian holding company with no offshore Labuan connection on the profitable sale of its shareholding in a foreign subsidiary are not subject to Malaysian capital gains tax but are subject to a 10% withholding tax when distributed to shareholders. Accordingly the "Malaysian Satay" corporate structure is to be preferred to ownership of a foreign subsidiary by a Malaysian company with no Labuan connection).

 

 

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