Malaysia's capital gains tax, in force since 2024, applies to disposals of unlisted shares by companies and certain other entities, so selling Bursa-listed shares does not trigger it. Gains can still be taxed as income for those who trade shares, and contract notes carry stamp duty, so the case for borrowing rests on control, upside and signalling.
Key takeaways
- Listed shares are outside it. The capital gains tax reaches unlisted shares, and the Inland Revenue Board says disposals of Bursa-listed shares are not subject to it.
- Companies, not individuals. Only companies, limited liability partnerships, trust bodies and co-operative societies pay it.
- Traders are different. Profits from share trading are business income under section 4(a) of the Income Tax Act 1967.
- Stamp duty applies to both routes. A sale's contract note is stamped, and so are a loan and its security documents.
- The real trade-off. Borrowing keeps control, upside, dividends and discretion; selling ends the position for good.
Does Malaysia tax gains on Bursa-listed shares?
Not as capital gains. Malaysia's capital gains tax reaches shares of Malaysian companies that are not listed on the stock exchange, and the Inland Revenue Board has said that disposals of Bursa-listed shares are not subject to it. Gains are taxed as income only where they arise from a business of dealing in shares.
The tax applies to gains from the disposal of a "capital asset", which section 2(1) of the Income Tax Act 1967 defines, for Malaysian shares, as a share of a company incorporated in Malaysia that is not listed on the stock exchange, owned by a company, limited liability partnership, trust body or co-operative society.
In its reply to the 2026 Budget memorandum, the Inland Revenue Board stated that disposals of shares listed on Bursa Malaysia are currently not subject to the tax.
Who pays the capital gains tax, and on what?
Companies, limited liability partnerships, trust bodies and co-operative societies pay it on gains from disposing of unlisted Malaysian shares, certain shares in foreign companies that hold Malaysian property, and foreign capital assets received in Malaysia. Individuals are not within it.
According to the Inland Revenue Board's guidelines on capital gains tax for unlisted shares, the rate is 10% of the chargeable gain, and for assets acquired before 1 January 2024 the disposer may instead elect 2% of the gross disposal price. The tax took effect from 1 January 2024, with disposals from 1 January to 29 February 2024 exempted.
When are share gains taxed as income?
When they arise from a business of trading in shares. The Inland Revenue Board treats profits from share trading as business income under section 4(a) of the Income Tax Act 1967, and uses the badges of trade to decide whether a disposal is trading or capital.
A company whose business is buying and selling shares is taxed on those gains as business income, not under the capital gains tax. Whether a particular holding is trading stock or a long-term investment turns on the facts, so a tax adviser should confirm the position before any sale.
What stamp duty applies to share trades and transfers?
A contract note for a sale of shares is stamped under item 31 of the First Schedule to the Stamp Act 1949, at RM1.50 for every RM1,000 of value, though the Government has remitted part of the duty on Bursa-listed shares.
The Inland Revenue Board has said that duty above RM1,000 per contract note for listed shares is remitted through subsidiary legislation, so the current effective rate and cap should be confirmed with a tax adviser. An instrument of transfer, such as one for unlisted shares, is stamped under item 32(b) at RM3 for every RM1,000 of the price or value, whichever is greater.
Borrowing has stamp costs too. Under the Stamp Act 1949, a loan agreement and the principal security for it are generally stamped at RM5 for every RM1,000 of the amount secured, so neither route is free of duty.
| Feature | Selling | Borrowing |
|---|---|---|
| Tax on gains | No capital gains tax on Bursa-listed shares; income tax only if the gain is part of a share-dealing business. | No disposal, so no gain arises while you keep the shares. |
| Stamp duty | On the contract note (item 31), with part remitted for listed shares; RM3 per RM1,000 on an instrument of transfer (item 32). | On the loan agreement and security documents, generally RM5 per RM1,000 of the amount secured. |
| Control and voting | Pass to the buyer. | Stay with you, subject to the facility terms. |
| Upside and dividends | Pass to the buyer. | Stay with you. |
| Disclosure | A substantial shareholder notifies a listed company of a change in interest within three days. | Whether creating a charge needs a notification turns on the facts; your counsel confirms. |
So why borrow instead of selling?
For listed shares, tax rarely decides the question, so the case for borrowing rests on what a sale gives up: control, upside, dividends and discretion. A stock loan keeps them, at the cost of interest and the risk of a margin call.
A sale is final, while a loan is reversible: when it is repaid, the charge is released and the shares come back. For a controlling shareholder, a visible disposal can also send a signal to the market that a loan does not, the theme of our note on the quiet liquidity.
Where a clean exit is genuinely the goal, a privately negotiated block trade remains the right instrument. The four routes, set side by side, are compared in ways to raise liquidity from your Bursa shares.
What else do shareholders ask about tax?
01Do individuals pay capital gains tax on Malaysian shares?
02Does a stock loan trigger capital gains tax?
03Who pays stamp duty on a share sale?
04When must capital gains tax be paid?
This note is general information only. It is not tax advice, and it does not describe the tax position of any particular holder. Rates, remissions and the Inland Revenue Board's guidance change, so confirm the current position with a Malaysian tax adviser before selling or borrowing.
