My wife and I are shareholders of Company X Sdn Bhd that owns a piece of land in Penang (“Penang Land”). 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 (“RPGT”) 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?


  • It depends on whether Company X Sdn Bhd is a “real property company”.
  • Para 34A, Schedule 2 of the Real Property Gains Tax Act 1976 (“RPGTA”) provides that acquisition of “real property company” shall be deemed to be acquisition of the chargeable asset i.e. the Penang Land which will be required to pay RPGT.
  • Para 34A 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.

Q: What is a “real property company”?

  • A “real property company” is a company that owns land which value is more than 75% of the value of its total tangible assets.
  • If the Penang Land’s value is 75% or more than the total tangible assets of Company X Sdn Bhd, then Company X Sdn Bhd is a “real property company”.

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’s intention is not to buy the Penang Land per se.

  • The application of Para 34A, Schedule 2 RPGTA 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 “real property company”, Para 34A applies.

Q: What is a “chargeable asset”?

  • Real property owned by the company which is taxable or chargeable.

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