KUALA LUMPUR (March 21): The government’s decision to exempt unit trusts from capital gains tax (CGT) is expected to bolster capital market performance and benefit over 90% of individual investors, said Deputy Finance Minister Lim Hui Ying.
Lim said this exemption aims to uphold unit trusts as an attractive investment avenue, ensuring accessibility to the public, particularly individuals nearing retirement age, by offering higher returns.
“The government believes that the CGT exemption on unit trusts will not only enhance capital market performance but also significantly benefit more than 90% of individual investors involved in the industry,” Lim said during the oral question and answer session in Dewan Rakyat on Thursday.
The introduction of the capital gains tax (CGT) was initially announced by Prime Minister Datuk Seri Anwar Ibrahim during the presentation of the amended 2023 budget in February that year.
In Malaysia’s 2024 budget announcement on Oct 13, 2023, Anwar specified that the government would impose CGT on the sale of unlisted shares by domestic companies, calculated based on net profit at a rate of 10%, effective March 1, 2024.
On Jan 16 this year, Finance Minister II Datuk Seri Amir Hamzah Azizan announced that the government had agreed to exempt the imposition of CGT, as well as taxes on foreign-sourced income (FSI) on unit trusts, with effect from Jan 1, 2024 until Dec 31, 2028.
Lim said that the decision to grant this exemption followed a series of discussions with capital market industry players, and acknowledged that it would impact the projected annual national revenue, estimated at RM800 million per year.
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