{"id":3340,"date":"2022-01-19T09:05:35","date_gmt":"2022-01-19T01:05:35","guid":{"rendered":"https:\/\/yhalaw.com.my\/?p=3340"},"modified":"2024-09-09T09:11:37","modified_gmt":"2024-09-09T01:11:37","slug":"real-property-gains-tax-sale-of-shares-of-company-that-owns-land","status":"publish","type":"post","link":"https:\/\/yhalaw.com.my\/my\/real-property-gains-tax-sale-of-shares-of-company-that-owns-land\/","title":{"rendered":"REAL PROPERTY GAINS TAX \u2013 SALE OF SHARES OF COMPANY THAT OWNS LAND"},"content":{"rendered":"<p><strong><em>My wife and I are shareholders of Company X Sdn Bhd that owns a piece of land in Penang (\u201cPenang Land\u201d). The Penang Land was bought in 2004 for RM10 mil. My wife and I have sold the shares of the company to my friend, Mr. A in 2018. We are required to pay real property gain tax (\u201cRPGT\u201d) if we sell the Penang Land to Mr. A. But we are not selling the land but shares of Company X Sdn Bhd. Are we still required to pay RPGT?<\/em><\/strong><\/p>\n<p>Depends.<\/p>\n<ul>\n<li>It depends on <strong>whether<\/strong> Company X Sdn Bhd is a \u201c<em>real property company<\/em>\u201d.<\/li>\n<li><strong><em><u>Para 34A, Schedule 2 of the Real Property Gains Tax Act 1976<\/u><\/em><\/strong> (\u201c<strong>RPGTA<\/strong>\u201d) provides that acquisition of \u201c<em>real property company<\/em>\u201d shall be deemed to be acquisition of the chargeable asset i.e. the Penang Land which will be required to pay RPGT.<\/li>\n<li><strong><em><u>Para 34A<\/u><\/em><\/strong> was an amendment to catch individuals who use companies to acquire land and then dispose of the shares in the company as a scheme to avoid payment of RPGT.<\/li>\n<\/ul>\n<p><strong><em>Q: <\/em><\/strong><strong><em>What is a \u201creal property company\u201d?<\/em><\/strong><\/p>\n<ul>\n<li>A \u201c<em>real property company<\/em>\u201d is a company that owns land which value is more than 75% of the value of its total tangible assets.<\/li>\n<li>If the Penang Land\u2019s value is 75% or more than the total tangible assets of Company X Sdn Bhd, then Company X Sdn Bhd is a \u201c<em>real property company<\/em>\u201d.<\/li>\n<\/ul>\n<p><strong>Q: Would there be any difference if Company X Sdn Bhd is a property development company and the purchase of the shares by Mr. A is because Mr. A wants to invest in a property development company. In another words, Mr. A\u2019s intention is not to buy the Penang Land <em>per se<\/em>.<\/strong><\/p>\n<ul>\n<li>The application of <strong><em><u>Para 34A, Schedule 2 RPGTA<\/u><\/em><\/strong> is irrespective of the intention or objective of a person who acquires or disposes the shares in the company. As long as the company falls within the definition of \u201c<em>real property company<\/em>\u201d, <strong><em><u>Para 34A<\/u><\/em><\/strong> applies.<\/li>\n<\/ul>\n<p><strong><em>Q: <\/em><\/strong><strong><em>What is a \u201cchargeable asset\u201d?<\/em><\/strong><\/p>\n<ul>\n<li>Real property owned by the company which is taxable or chargeable.<\/li>\n<\/ul>","protected":false},"excerpt":{"rendered":"<p>Am I liable to pay real property gain tax (RPGT) for selling shares of a company which owns land. Why am I liable when I am not selling the land?<\/p>","protected":false},"author":9,"featured_media":3349,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1567],"tags":[2617,2616,1856,2615],"class_list":["post-3340","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-property-law","tag-land","tag-liable","tag-rpgt","tag-shares"],"_links":{"self":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/3340"}],"collection":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/comments?post=3340"}],"version-history":[{"count":1,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/3340\/revisions"}],"predecessor-version":[{"id":3341,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/posts\/3340\/revisions\/3341"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/media\/3349"}],"wp:attachment":[{"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/media?parent=3340"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/categories?post=3340"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/yhalaw.com.my\/my\/wp-json\/wp\/v2\/tags?post=3340"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}