Introduction
Malaysia REIT taxation plays a key role in the real estate investment landscape. A Real Estate Investment Trust (REIT) or Property Trust Fund (PTF) allows investors to pool funds and invest in income-generating properties, while enjoying specific tax incentives under the Malaysian Income Tax Act.
What is a REIT/PTF?
A REIT (Real Estate Investment Trust) or PTF (Property Trust Fund) is a type of unit trust that invests mainly in income-producing real estate such as shopping malls, offices, or hotels.
It allows investors to earn a share of the income generated from these assets without directly buying property.
Islamic REIT/PTF
An Islamic REIT/PTF operates according to Syariah principles (Islamic law). Investments are screened to ensure compliance with Islamic finance guidelines, excluding prohibited activities such as gambling or alcohol-related businesses.
Structure of a REIT/PTF
A REIT/PTF is established as a trust body under a trust deed, signed between two main parties:
| Role | Description |
| Manager | Responsible for managing the REIT’s investments and operations. |
| Trustee | Holds the REIT assets on behalf of unit holders and ensures compliance with the trust deed and laws. |
This structure ensures transparency and accountability in managing investors’ funds.
Income Distribution
Income earned by a REIT/PTF — typically rental income, management fees, or capital gains — is distributed to unit holders in proportion to their holdings.
Distributions are treated as income in the hands of investors, and REITs are encouraged to distribute at least 90% of total income to qualify for tax transparency under Section 61A of the Income Tax Act 1967.
Tax Treatment
- REITs that distribute at least 90% of their income are exempt from income tax at the REIT level.
- Instead, tax is imposed at the unit holder’s level depending on their tax status (resident company, individual, non-resident, etc.).
- Withholding tax rates may apply to certain categories of investors (e.g., 10% for individuals, 24% for non-residents).
Benefits of Malaysia REIT Taxation
- Tax efficiency through pass-through treatment.
- Diversified exposure to real estate with professional management.
- Lower entry cost compared to direct property ownership.
Key Takeaways
- REIT/PTF structures are governed by a trust deed between a manager and a trustee.
- To enjoy tax transparency, a REIT must distribute at least 90% of income.
- Investors are taxed based on their own tax profile under Malaysian tax law.
ANC Group – Your Personal Tax Advisor
Tax consulting is the core service of ANC Group. Our tax professionals provide clients with comprehensive tax support and guidance. We offer tax consulting and compliance services for expatriates, entrepreneurs, and listed and non-listed companies.
Our tax consulting services include business tax, transaction tax, personal tax, and corporate income tax. We don’t just guide you in interpreting and applying complicated taxation rules, but to explore new opportunities and business trends.
ANC Group keep you abreast with Malaysia tax updates and any changes in the local regulations.
We work closely with industry specialists, authorities, and associated professionals within ANC Group to provide the best-in-class integrated tax planning solutions. ANC specialists coordinate the accounting and taxation services to bring your business to success.
If you need professional tax advisory services regarding the Malaysia Income Tax Act 1967, our team is ready to assist you. Contact us here to discuss how we can support your business.
