Malaysia legislation
Section 8
Section 8
The principal Act is amended by inserting after section 15b the following section:
“Derivation of gains or profits from the disposal of capital assets deriving value from real property in Malaysia 15c. (1) Subject to subsection (2), gains or profits accruing to a person in a year of assessment on the disposal of capital asset which is a share of a controlled company (hereinafter referred to as the “relevant company”) incorporated outside
Malaysia shall be deemed to be derived from Malaysia where the relevant company owns real property situated in Malaysia or shares of another controlled company or both.
(2)
Subsection (1) shall apply where at the date of acquisition of the shares of the relevant company—
(a)
the defined value of the real property situated in Malaysia
(including any right or interest thereof) owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset;
(b)
the defined value of shares of another controlled company owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset:
Provided that the defined value of the real property situated in Malaysia (including any right or interest thereof) owned by another controlled company, is not less than seventy-five per cent of the value of its total tangible asset; or
Act 851
(c)
the defined value of real property situated in Malaysia and shares of another controlled company referred to in paragraphs (a) and (b) owned by the relevant company is not less than seventy-five per cent of the value of its total tangible asset:
Provided that subsection (1) shall continue to apply notwithstanding that at the time of disposal of shares of the relevant company the defined value referred to in paragraph (a), (b)
or (c) is less than seventy-five per cent of the value of its total tangible asset.
(3)
The shares of the relevant company in this section shall be deemed to be acquired—
(a)
on the date the defined value of real property or shares or both owned by the relevant company is in accordance with subsection (2); or
(b)
on the date of acquisition of the shares of the relevant company.
(4)
For the purposes of this section, the acquisition price of shares of the relevant company shall—
(a)
where paragraph (3)(a) applies, be deemed to be equal to a sum determined in accordance with the formula:
A x C
B where
A is the number of shares of the relevant company referred to in subsection (1);
B is the total number of issued shares in the relevant company at the date of acquisition of the shares of the relevant company referred to in subsection (1); and
C is the defined value of the real property or shares or both owned by the relevant company at the date of acquisition of the shares of the relevant company referred to in subsection (1);
Finance (No. 2)
(b)
where paragraph (3)(b) applies, be determined in accordance with paragraph 65e(2)(b) or subsection 65e(8).
(5)
For the purposes of this section—
“defined value” means the market value of real property or the acquisition price of shares of another controlled company as determined under subsection (2);
“value of its total tangible assets” means the aggregate of the defined value of real property (including any right or interest thereof) or shares of another controlled company or both and the value of other tangible assets.”.
Amendment of section 44