Malaysia RPGT 2026: The Buyer May No Longer Need to Automatically Retain 3%, 5% or 7% — Why This Matters in Property Transactions
When a property in Malaysia is sold for RM5 million, many parties focus immediately on the selling price, deposit, financing and completion period.
But there is another number that can materially affect the seller’s cash flow at completion: the amount retained by the purchaser and remitted to the Inland Revenue Board under Section 21B of the Real Property Gains Tax Act 1976.
A significant change applies to disposals from the Year of Assessment 2026. According to the latest guidance from Inland Revenue Board of Malaysia (HASiL/LHDN), an acquirer may, in qualifying circumstances, remit an amount equal to the disposer’s deemed assessment amount instead of automatically applying the conventional 3%, 5% or 7% retention rate.
For property owners, investors, companies, lawyers and transaction negotiators, this is more than a technical tax amendment. It can affect the amount of money available to a seller when a transaction completes.
First, understand what the 3%, 5% and 7% actually mean
A common misconception is that the purchaser’s RPGT retention represents the seller’s final tax liability.
It does not.
Section 21B essentially requires the acquirer, where the consideration consists wholly or partly of money, to retain and remit the applicable amount to the Director General of Inland Revenue. The amount remitted is then applied towards the disposer’s RPGT liability. (Hasil)
HASiL’s current guidance states that the applicable retention/remittance rates are generally:
3% for Part I disposers;
5% for Part II disposers where the disposal is within three years, reducing to 3% from the fourth year onwards; and
7% for Part III disposers. (Hasil)
Part I includes, for example, Malaysian citizen individuals and partnerships. Part II generally covers categories such as Malaysian-incorporated companies, trustees and certain registered bodies, while Part III covers specified non-citizen/non-permanent-resident individuals and foreign-incorporated companies. (Hasil)
The important point is that retention rate and RPGT tax rate are not the same thing.
What changed from YA 2026?
HASiL’s updated guidance states that beginning with disposals in Year of Assessment 2026, an additional option is available.
If the disposer notifies the acquirer of the deemed assessment amount before the Section 21B remittance is made, the acquirer may choose the amount to remit by reference to the applicable statutory retention or the deemed assessment amount, subject to the applicable rules and the lower amount mechanism described by HASiL. (Hasil)
Why is this important?
Consider a simplified example.
A Malaysian individual sells a property for RM5 million.
Under the conventional 3% retention mechanism:
RM5,000,000 × 3% = RM150,000
The purchaser may therefore have to retain RM150,000 and remit it to HASiL.
But suppose, after calculating the actual chargeable gain, allowable acquisition and disposal costs and the applicable RPGT treatment, the disposer’s deemed assessment amount is only RM40,000.
Subject to the statutory requirements being properly satisfied, the 2026 mechanism may allow the relevant remittance to reflect that lower deemed assessment amount instead.
The potential cash-flow difference to the seller is:
RM150,000 − RM40,000 = RM110,000.
That can be commercially significant.
For a company selling industrial land worth RM20 million or RM50 million, the cash-flow implications can be much larger.
Why the timing of the notification matters
This new option does not mean a purchaser can simply decide at completion to retain whatever amount the seller says is payable.
HASiL specifically states that the disposer must notify the acquirer of the deemed tax amount before the remittance is made. (Hasil)
That makes transaction coordination important.
The disposer, purchaser, solicitors and tax adviser should not leave the RPGT calculation until the final moment.
A seller should assemble the relevant records early, potentially including the original SPA, acquisition price, legal fees, permitted incidental costs, subsequent disposal documentation and other evidence relevant to calculating the chargeable gain.
The exact deductibility of any expenditure should be assessed according to the RPGT legislation and the facts of the transaction rather than assumed.
The 60-day deadline remains critical
The 2026 change does not remove the purchaser’s compliance obligations.
HASiL states that the acquirer is required to remit the Section 21B amount within 60 days after the date of disposal. If the acquirer fails to pay the required amount, a 10% increase on the unpaid amount may be imposed, and both the original amount and the increase become a debt due to the Government. (Hasil)
Both sides also have RPGT filing responsibilities.
HASiL states that disposers generally have to submit the relevant RPGT return within 60 days after the disposal date, while acquirers must submit the applicable acquisition return within 60 days. Since 1 January 2025, electronic filing through the e-CKHT portal in MyTax is mandatory; paper submissions are not accepted as a substitute. (Hasil)
RPGT is now operating under self-assessment
Another major procedural change should not be overlooked.
Malaysia introduced the RPGT Self-Assessment System (STS CKHT) for disposals beginning on 1 January 2025.
Under this system, the taxpayer determines the chargeable gain, calculates the RPGT and submits the return. HASiL explains that the submitted RPGT return itself is treated as the notice of assessment; no separate assessment notice is ordinarily issued merely to establish that assessment. (Hasil)
The disposer must generally pay the tax or balance of tax due within 90 days from the disposal date. Records relating to the transaction must generally be retained for seven years. (Hasil)
This means documentation has become even more important.
A property owner should not wait until years later to reconstruct the acquisition and improvement history of a property.
Why this matters especially for industrial and land transactions
The impact becomes more obvious as transaction values increase.
Take a hypothetical RM30 million industrial-land sale involving a Part I disposer.
A 3% retention represents:
RM900,000.
If the actual deemed RPGT assessment were materially below RM900,000, the difference could affect the seller’s ability to discharge financing, fund another acquisition, distribute proceeds among beneficiaries or shareholders, or reinvest immediately into another project.
This is particularly relevant in Selangor and Kuala Lumpur, where industrial, commercial and redevelopment land can involve substantial consideration.
The lesson is therefore not “how to avoid RPGT”.
The lesson is how to structure and administer the transaction correctly so that the amount withheld corresponds with the law while unnecessary cash-flow friction is minimised.
A better transaction workflow
For sellers, RPGT planning should begin when the SPA terms are being prepared, not after the transaction is almost completed.
The seller should identify the acquisition date and cost, collect supporting documentation, establish the likely RPGT position and obtain professional tax advice where necessary.
The purchaser and purchaser’s solicitor should independently ensure that the Section 21B requirements are complied with. A seller’s calculation should never simply be accepted informally where statutory documentation or notification is required.
For negotiators, there is another practical lesson.
When discussing the “net proceeds” of a property sale with a client, do not simply calculate:
Selling price − outstanding loan − legal fees.
RPGT, Section 21B retention, agent fees, consent costs, redemption sums and other transaction expenses can materially affect what the seller actually receives.
A RM10 million sale price does not necessarily mean RM10 million reaches the seller.
The bigger lesson from the 2026 RPGT change
Malaysia’s property transaction system is becoming increasingly digital and self-assessed.
The introduction of mandatory e-CKHT filing, RPGT self-assessment and the 2026 Section 21B remittance option all point in the same direction:
transaction parties are being given more responsibility to calculate, document and comply correctly.
That creates flexibility, but it also increases the importance of getting the calculation right.
For landowners and property investors, tax should therefore never be treated as an administrative matter to be dealt with only after the SPA is signed.
In a major property transaction, tax planning is part of transaction planning.
And from 2026 onward, understanding the difference between the seller’s actual deemed RPGT assessment and the purchaser’s conventional retention percentage could make a meaningful difference to the seller’s cash flow at completion.
For the latest official requirements, refer to HASiL’s Retention and Remittance by Acquirer guidance and the 2026 RPGT Operational Guideline, published on 17 March 2026.
Disclaimer: This article is for general sharing of legal and real estate knowledge and experience only and does not constitute legal advice or recommendations.
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