Real Property Gains Tax Audit Framework 2025

The Malaysian Inland Revenue Board (IRBM) has published the Real Property Gains Tax Audit Framework (RPGT AF) 2025, which will take effect from 1 January 2025. This framework is in line with the self-assessment system (STS) for the real property gains tax and strengthens tax compliance, transparency and enforcement of the Real Property Gains Tax Act of 1976 (RPGT Act 1976).

The key points of the 2025 RPGT audit framework are set out below.

Scope

The tax provisions applicable to the audit are not limited to those of the 1976 RPGT Act. The provisions of other tax laws administered by the IRBM may also apply.
The RPGT audit covers three (3) preceding tax years (YAs), but may be extended to five (5) preceding YAs depending on the issues identified during the audit. This time limit does not apply in cases of fraud or wilful default.

Audit selection criteria

Cases may be selected based on:

selection based on risk assessment criteria;
information from third parties;
specific issues for certain disposal groups; or
selection by location, among others.

Audit Process and Timeline

The audit process involves:

1. initial action

Taxpayers will receive official requests via email or mail to submit documents within 14 days;
In cases where no documents and information are required, no written request will be issued and the taxpayer will be sent the tax assessment notice together with details of the tax adjustments.

2. Document review

RPGT audit officers may review all documents related to the disposal of assets, including expenses and incidental costs, in order to verify the taxpayer's disclosures.
In certain circumstances, the RPGT audit officer may also review documents other than those relating to the disposal of the taxpayer's assets.
Under the provisions of Section 28 of the 1976 RPGT Law, the RPGT audit officer is authorised to have full and free access to the taxpayer's records and to make copies of relevant records and documents as needed.

3. Audit resolution

If taxpayers disagree with the findings, they may submit an appeal and additional documentation within 18 days of the date of the audit findings letter.
The audit must be completed within 90 calendar days from the date of commencement or written request for information.

Voluntary disclosure

A voluntary disclosure can be made at any time in writing by letter or through electronic media if the audit has not yet begun and the taxpayers have filed the RPGT return.

Penalties for non-compliance

Where the audit findings reveal an omission or an understatement of profits, a penalty may be imposed under subsection 30(2) of the RPGT Act 1976 at the rate of the understated amount of tax (100 %). However, for the purposes of this RPGT-AF, the penalty under subsection 30(2) of the RPGT Act 1976 shall be imposed at the following rates:

Penalty for Incorrect Returns/Information	Rate
Audited without voluntary disclosure	45 %
Voluntary disclosure made within 6 months of filing the RPGT return (also applies to subsequent voluntary disclosure made within the same timeframe)	10 %
Voluntary disclosure more than 6 months after filing the RPGT return	20 %

Appeals Process

Taxpayers who are dissatisfied with the Notice of Assessment/Non-assessment issued by the IRBM in the course of this income tax audit may file an appeal with the Special Assistant Commissioner of Income Tax within 30 days of the date of the Notice of Assessment/Non-assessment.
All appeals against assessments must be made by completing a Form Q and addressed to the appropriate State Director of Operations.

Important Information for Taxpayers

The RPGT AF 2025 contains the IRBM's commitment to strengthening tax compliance and transparency under the RPGT Act of 1976. As it is consistent with the self-assessment system, taxpayers are reminded of the importance of keeping accurate records to ensure full compliance with the RPGT Act of 1976.