Real Property Company (RPC) Shares: RPGT, CGT and the 75% Test
Property is often held inside an Sdn Bhd, and the obvious way to sell it is to sell the company rather than the land — no transfer, no memorandum of transfer, no RPGT. Malaysia closed that door in 1976. Paragraph 34A of Schedule 2 of the RPGT Act treats shares in a Real Property Company as chargeable assets in their own right, so disposing of the shares is taxed much like disposing of the property. Since 1 January 2024 the regime has split in two: individuals still pay RPGT on RPC shares, while companies pay the new capital gains tax instead. Here is how to tell whether you own RPC shares, what your cost base is, and which tax applies.
What makes a company an RPC
Two conditions must both be met. First, the company must be a controlled company — broadly, a company with not more than 50 members that is controlled by not more than five persons, which describes most family and SME holding companies. Second, the defined value of the real property (or RPC shares) it owns must be at least 75% of the value of its total tangible assets.
The definitions inside that test are what trip people up:
- Defined value means the market value of the real property, or the acquisition price of any RPC shares the company holds — not the historic book cost sitting in the accounts.
- Total tangible assets is the aggregate of that defined value plus the company's other tangible assets: cash, trade debtors, stock, plant and equipment, prepayments.
- Current liabilities are excluded from the computation. You are not testing net assets — a company loaded with trade creditors does not escape the ratio that way.
- Intangibles such as goodwill, patents and copyrights are not tangible assets and do not enter the denominator, which pushes the ratio up rather than down.
Working the 75% test
Take a controlled company with 1,000,000 issued shares. It owns a shoplot with a market value of RM3,000,000, plus plant and equipment of RM200,000, stock of RM150,000, trade debtors of RM250,000 and cash of RM400,000.
Total tangible assets are RM3,000,000 + RM1,000,000 = RM4,000,000, and the real property is RM3,000,000 of that — exactly 75%. The threshold is met, so the company is an RPC and every shareholder's shares become chargeable assets.
Notice how sensitive that is. Pay out RM400,000 of the cash as a dividend and the ratio rises to about 83%. Spend RM1,000,000 on new machinery and it falls to 60%, and the company is not an RPC at all. The test is applied at a point in time — when the company acquires real property, or when a change in its asset mix pushes it over the line — which is why the composition of the balance sheet on that specific date matters far more than the average across the year.
Your deemed acquisition price
Shareholders do not choose to acquire RPC shares; the shares they already hold become RPC shares on the date the company becomes an RPC. Paragraph 34A sets both the date and the price. The date of acquisition is the date the company became an RPC, and the acquisition price of the shares deemed acquired on that date is:
A ÷ B × C — where A is the number of shares deemed acquired, B is the total number of issued shares in the company on that date, and C is the defined value of the real property and RPC shares the company owned on that date.
Continuing the example: the company becomes an RPC on 15 March 2023, when the shoplot's defined value is RM3,000,000. A shareholder holding 300,000 of the 1,000,000 issued shares is deemed to acquire 300,000 RPC shares on 15 March 2023 at 300,000 ÷ 1,000,000 × RM3,000,000 = RM900,000. Shares bought later, after the company is already an RPC, are acquired at the price actually paid for them.
One consequence catches people years afterwards: paragraph 34A(6) keeps shares that were RPC shares when acquired within the RPGT net even if the company later drops below 75%. Selling the shoplot out of the company, or buying enough other assets to dilute the ratio, does not retroactively clean the shares you are already holding.
Since 2024: individuals pay RPGT, companies pay CGT
The Finance (No. 2) Act 2023 introduced a capital gains tax on the disposal of unlisted shares in Malaysian companies with effect from 1 January 2024, and it took RPC shares with it — but only for some disposers.
| Disposer of RPC shares | Tax from 1 January 2024 | Rate |
|---|---|---|
| Individual | RPGT (unchanged) | 30% / 20% / 15% / 0% by holding period |
| Company, LLP, trust body, co-operative | Capital gains tax under the Income Tax Act | 10% of net gain |
| Same, asset acquired before 1 Jan 2024 | Capital gains tax, with an election | 10% of net gain or 2% of gross disposal price |
What that split is worth in ringgit
Return to the shareholder deemed to have acquired 300,000 RPC shares on 15 March 2023 for RM900,000. They sell the lot on 20 January 2026 for RM1,400,000, incurring RM30,000 of professional fees.
As an individual, the chargeable gain is RM1,400,000 − RM30,000 − RM900,000 = RM470,000. Schedule 4 relief exempts the greater of RM10,000 or 10% of the gain, so RM47,000 comes off, leaving RM423,000. The holding period is under three years, so the citizen rate is 30% — RPGT of about RM126,900.
Had the same block been held by a holding company instead, RPGT would not apply at all. The company pays capital gains tax at 10% of the net gain of RM470,000, or RM47,000 — and because the shares were acquired before 1 January 2024, it may instead elect 2% of the gross disposal price, which is RM28,000. Corporate disposers of RPC shares came out of the 2024 reform substantially better off; individuals did not move.
Two boundaries are worth stating plainly. Capital gains tax applies to shares, not to land and buildings — disposing of the property itself remains an RPGT event whoever owns it. And gains on unlisted shares disposed of by companies between 1 January and 29 February 2024 were exempted under the transitional order, so disposals in that window are not caught.
Filing runs on different rails
- RPGT on RPC shares — the disposer files Form CKHT 1B (the return specific to RPC share disposals) and the acquirer files CKHT 2A, both within 60 days of the disposal date. Where the disposal is exempt or produces no chargeable gain, CKHT 3 is filed so the acquirer's retention is not withheld.
- Capital gains tax — the disposer files a CGT return through the e-CKM service on LHDN's MyTax portal within 60 days of the disposal, and pays within the same window. This is separate from the company's annual Form C.
- Valuation evidence — the 75% test and the A ÷ B × C computation both run on market value at a specific date. For anything material, get a registered valuer's report at the time the company becomes an RPC, not when you come to sell.
- Share transfers also attract stamp duty on the instrument of transfer, assessed on the consideration or the value of the shares, whichever is higher. That is separate from RPGT or CGT and is not relieved by either.
Important caveats
RPC status is one of the more technical corners of Malaysian tax, and the consequences of getting it wrong are not small — an unnoticed RPC classification turns an ordinary share sale into a chargeable disposal with a 60-day filing deadline attached. Whether a company is controlled, what its real property is worth on the relevant date, which assets count as tangible, and whether a restructuring exemption is available are all fact-specific questions.
This is general information for planning, not tax advice. Confirm the position with a licensed tax agent and against LHDN's current RPGT and capital gains tax guidelines before acting, and get advice before restructuring a shareholding — the ordering of steps often decides the tax.
Use the calculator below to model the RPGT side: enter your deemed acquisition price, the disposal consideration and the dates to see the rate band and Schedule 4 relief applied to an individual's disposal of RPC shares.
Last reviewed: 2026-08-29