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Inland Revenue Board of Malaysia issues Practice Note on tax treatment for unit holders of real estate investment trusts (REITs)
The 10% withholding tax (WHT) rate on distributions by REITs and property trust funds (PTFs) to categories of taxpayers other than (resident and non-resident) companies expired on 31 December 2025. There have been recent press reports discussing that these preferential WHT rates were initially designed to support the REIT sector during its early development phase and that given the success, maturity and commercial viability of the sector, the Government was reviewing the tax position.
The Inland Revenue Board of Malaysia has now issued Practice Note No. 2/2026, dated 18 March 2026, confirming the tax treatment of REIT distributions from the year of assessment (YA) 2026 onwards. It is now clear that most categories of investors (other than non-resident companies, which will continue to be subject to 24% WHT) will need to include REIT distributions as income in their Malaysian income tax returns and be subjected to tax at prevailing rates on such income.
Please refer to the alert below for further details.Please refer to the alert below for further details.