Does Malaysia Have Inheritance Tax?

No. Malaysia does not currently have inheritance tax or estate duty. A beneficiary generally does not pay tax simply because they receive an inheritance from a deceased person's estate.

Malaysia previously imposed estate duty, but it was abolished from 1 November 1991. PwC's Malaysia tax summary also lists inheritance tax as not applicable.

However, that does not mean every inheritance or estate transfer is completely free of tax or other costs. An estate may still have income tax obligations, and property transfers or the later sale of inherited property can have separate tax consequences. Probate, administration and professional fees may also apply.

If the deceased or beneficiaries have connections to other countries, foreign inheritance or estate taxes may also need to be considered.

This article provides general information only and is not tax or legal advice for a particular estate.

Does Malaysia have inheritance tax or estate duty?

Malaysia currently has neither a general inheritance tax nor estate duty.

Malaysia previously had estate duty, but it was repealed with effect from 1 November 1991.

This means that if you inherit money or other assets from a Malaysian estate, there is generally no separate inheritance tax charged simply because you have received the inheritance.

There can, however, be other taxes and costs associated with administering, transferring or later selling inherited assets.

Are there costs when inheriting an estate in Malaysia?

Yes. The absence of inheritance tax or estate duty does not mean that administering an estate is free.

An executor or administrator still needs to identify the deceased's assets and liabilities, obtain the necessary legal authority and arrange for assets to be transferred to the beneficiaries.

Depending on the estate, costs may include:

• Probate or administration expenses
• Court or filing fees
• Property valuation fees
• Legal and professional fees
• Property-related charges
• Outstanding tax owed by the deceased
• Tax arising from income earned by the estate

Banks, land offices, courts and other institutions may also have their own requirements before an asset can be released or transferred.

The exact process will depend on factors such as whether the deceased left a valid Will, who is entitled to administer the estate and what assets they owned.

For more information about Wills and estate planning, visit our Malaysia Help Centre.

Do you pay tax on inherited money in Malaysia?

There is generally no inheritance tax or estate duty simply because a beneficiary receives money from an estate in Malaysia.

However, it is important to distinguish the inheritance itself from income earned by the deceased or the estate.

An estate may continue earning income between the date of death and the date the assets are distributed to beneficiaries.

There may also be outstanding income tax owed by the deceased that needs to be settled during the administration of the estate.

Executors should confirm the current notification, filing and payment requirements with Lembaga Hasil Dalam Negeri Malaysian (LHDN) or a qualified Malaysian tax adviser.

What happens if you sell inherited property?

Selling an inherited property later is different from receiving it as part of an estate.

If the beneficiary or estate later sells Malaysian real property, Real Property Gains Tax (RPGT) may need to be considered.

The tax treatment will depend on the rules and rates applying to the owner, the relevant acquisition and disposal dates and the particular transaction.

Stamp duty treatment can also depend on the instrument being used and whether the property transfer follows a Will, faraid or the Distribution Act 1958.

What if you inherit assets outside Malaysia?

Malaysia's inheritance tax rules only answer part of the question when an estate includes assets in another country.

Another country may impose inheritance tax, estate tax, capital gains tax, transfer duty or other charges even though Malaysia does not.

The rules can depend on where the asset is located as well as the deceased's or beneficiary's residence, citizenship, domicile or other connection to that country.

For a cross-border estate, important questions can include:

• Where is each asset legally located?
• Which country's succession laws apply?
• Is a local grant of probate or other authority required?
• Would a separate Will for that country make administration easier?
• Does another country tax the estate or beneficiary?
• Could tax arise when an inherited asset is later sold?
• Is any tax relief available?
• If there are multiple Wills, have they been prepared so they work together?

For example, a Malaysian resident with property in a country that imposes estate or inheritance tax may still have to consider that country's tax rules for the foreign property.

Our guide to estate planning for Malaysians with overseas assets looks at cross-border estate planning in more detail.

What information should you gather?

If you need advice about an inheritance or estate, preparing the relevant information before speaking with a lawyer, tax adviser or estate planning professional can make the process much easier.

Try to prepare:

1. The deceased's and beneficiaries' countries of residence and citizenship, together with any relevant domicile considerations.
2. A list of the deceased's assets and liabilities and the country where each is located.
3. Ownership details for Malaysian and overseas properties.
4. Existing Wills, trusts, nominations and relevant company arrangements.
5. Details of income received before and after death.
6. Relevant tax filings and any unresolved tax matters.
7. Details of any planned transfers, sales or distributions.

When sharing sensitive information, ask the adviser for a secure method of providing documents. Avoid sending passwords, full account credentials or unnecessary identity documents by ordinary email.

Does having a Will affect inheritance tax?

Having a Will does not create or remove an inheritance tax liability.

A Will instead helps determine how your estate should be distributed, who should receive particular gifts and who you want to administer your estate.

It can be particularly important when property or other assets are held in more than one country. Depending on the circumstances, carefully coordinated Wills can make it easier to deal with assets across different jurisdictions.

Tax is only one part of this planning. Property ownership, beneficiary nominations, trusts and foreign succession laws can also affect what happens to an asset after death.

You can read more about including property in a Malaysian Will.

For straightforward circumstances that fall within the service's scope, you can also explore the Malaysia Online Will Service.

If your estate includes substantial property, business interests, bespoke distributions or assets in multiple countries, the Premium Will Service may be more appropriate. Where necessary, you should also obtain qualified Malaysian or overseas tax and legal advice.

Frequently asked questions

Do beneficiaries pay inheritance tax in Malaysia?

No. Malaysia does not currently impose a general inheritance tax on assets received by a beneficiary.

Other taxes or costs can still arise during the administration of the estate, from income earned by the estate, when property is transferred or sold, or because an asset is located in another country.

Is inherited property taxable in Malaysia?

The transfer of property through an estate is not the same as selling the property.

LHDN provides specific rules for determining the acquisition and disposal values when property passes from a deceased person's estate to an executor or beneficiary. If the property is later sold, RPGT may need to be considered.

Is there inheritance tax for foreigners in Malaysia?

Malaysia does not impose a general inheritance tax simply because a beneficiary inherits assets from a Malaysian estate.

However, nationality alone does not determine the entire tax position. If the deceased, beneficiary or assets have connections to another country, that country's tax and succession rules may also apply.

When was estate duty abolished in Malaysia?

Malaysia's former estate duty was repealed with effect from 1 November 1991. Malaysia therefore does not currently impose estate duty on estates in the way it did before that date.