Larry Sng (PBM-Julau) said some corporate groups might engage in restructuring activities before March 1, 2024, to mitigate potential tax implications that do not add value to their businesses.

“Many corporations have held investments for many years, and their value appreciates significantly over time,” he said when debating the 2024 budget proposals in the Dewan Rakyat.

“It doesn’t seem logical that the CGT should be applied retroactively to the gains accumulated in the years (before the taxation).”

Sng also sought clarification on whether foreign entities would be subject to CGT when divesting shares in private limited companies.

Safe harbour rules are provisions established by tax authorities to provide taxpayers with predetermined conditions or limits that, when met, exempt them from certain tax obligations or penalties.

In tabling the budget last Friday, Prime Minister Anwar Ibrahim said the government would impose CGT for the disposal of unlisted shares by local companies based on the net profit at a rate of 10% from March 1, 2024.

The CGT was first announced by Anwar in the revised 2023 budget in February this year.

CGT is imposed in several Southeast Asian countries, such as Thailand (20%), Indonesia (22%), Vietnam (20%), Cambodia (20%) and Myanmar (10% for the non-oil and gas sector).