CGT Exemption on disposal of shares related to restructuring of companies scheme and IPO

The following Orders were gazetted on 8 October 2024, to exempt Capital Gains Tax (“CGT”) on gains or profits received from the disposal of unlisted shares related to the restructuring of companies scheme or for an initial public offering (“IPO”).

Income Tax (Restructuring of Companies Scheme) (Exemption) Order 2024
Income Tax (Initial Public Offering) (Exemption) Order 2024

The exemption period is from 1 March 2024 to 31 December 2028.

For the disposal of shares related to the restructuring of companies scheme, the following conditions need to be fulfilled:

The disposal of shares shall be made from 1 March 2024 to 31 December 2028;
The shares shall be disposed of under a scheme for the restructuring of companies in the same group to increase efficiency in the operation of the entity, or the acquirer company, or both; and
The consideration for the disposal of shares shall consist of either shares in the acquirer company or a combination of up to 75 % of shares in the acquirer company and balance of monetary payment, and the shares shall be issued to the entity;
An application is required to be submitted to the Inland Revenue Board (“IRB”) after 3 years from the date of the disposal of shares by the entity. Further guidance is expected to be released by the IRB soon.

For the disposal of shares related to IPO, the following conditions need to be fulfilled:

The disposal of shares shall be made from 1 March 2024 to 31 December 2028;
The entity shall apply for the IPO under the Capital Market and Services Act 2007 within the period of 1 year from the date of the disposal of shares and approval should be obtained on or before 31 December 2028.