IRB: All property deals in cryptocurrency subject to RPGT

PETALING JAYA (Jan 22): All property transactions in Malaysia that use cryptocurrency are still liable for real property gains tax (RPGT), said the Inland Revenue Board (IRB) CEO Datuk Seri Sabin Samitah.

In a report by The Star, he said taxes should be paid even when deals are carried out with digital currencies.

The transactions fall under the Real Property Gains Tax Act 1976, where the vendor and buyer must disclose details of the transaction to the IRB.

According to the current RPGT rates, Malaysians and permanent residents are liable to pay a tax of 30% on gains from disposal within the first three years of owning the property. In the fourth year, this drops to 20% and then 15% in the fifth year, with no taxes imposed on disposals made on subsequent years.

Meanwhile, companies are liable to pay RPGT of 30% on disposal within the first three years of acquiring the property, 20% in the fourth year, 15% in the fifth year, 6% in the sixth year, and nothing thereafter.

Foreign citizens, on the other hand, are taxed 30% for the first five years, and then 5% in the sixth and seventh years.

The IRB is in the middle of finding out if businessman Alexander Yee and Polycarp Chin — who had on Jan 8 inked the sale and purchase agreement (SPA) of a 1.22ha parcel on Libaran island, just off Sabah’s coast — have declared their transaction, he added.

“We are checking to see if they are aware they are required to pay the property gains tax, if any, when using cryptocurrency,” he added.

Yee had agreed to sell the land to Chin for half a bitcoin, which at that time was worth about RM38,000.

Chin had paid a deposit of 0.05 bitcoin (RM3,883.25), with the remaining 0.45 bitcoin to be paid upon the successful transfer of the land ownership.

A whole bitcoin at that time was worth RM77,665. Following a steep decline in its value over the past two weeks after central banks clamped down on digital currencies, a bitcoin today is worth RM45,072.54, according to CoinDesk.

The Star reported that Yee and Chin had explained that the transaction was conventional in every way except for the usage of the cryptocurrency.

Moreover, the SPA had valued the property at RM40,000, which was the same price of the sale, thus he believes the transaction is not liable for RPGT.

Nonetheless, there are other charges that the transaction entails, such as legal certification by lawyers, payment of stamp duty and application to transfer the land ownership at the Sandakan land office, said Yee.