In response to the European Union’s Code of Conduct Group, Hong Kong, Singapore and Malaysia have amended their local income tax laws to introduce a capital gains tax on the sale of assets.
In the case of Hong Kong and Singapore, the capital gains tax applies to the sale of offshore capital assets, while the capital versus income distinction continues to apply to the sale of onshore capital assets.
Hong Kong already introduced the capital gains tax on gains from the sale of offshore equities in 2023 but had to expand the scope of the capital gains tax to offshore non-equities to comply with the European Union requirements. The sale of offshore IP rights is also within the scope of the new capital gains tax.
Malaysia has introduced a capital gains tax on gains derived from the sale of both onshore and offshore capital assets, albeit at different tax rates, and a temporary exemption of the new tax is provided until 1 March 2024.
Interestingly, transactions in Malaysian real property by corporations are now subject to the new capital gains tax rule rather than being taxed under the Real Property Gains Tax Act.
Learn more about these and other tax updates in this edition:
