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Question:

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“Dear Lawyer Yeo, I have a few enquiries regarding the inheritance of Malaysian properties by foreign citizens and would appreciate your legal opinion.

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Five years ago, my father executed a will in which he distributed his palm oil estate in Johor to me. At that time, I was still a Malaysian citizen, and the will therefore only states my Malaysian NRIC number.

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Subsequently, I moved to Singapore for work, and just last month, I have obtained Singapore citizenship. I am now no longer a Malaysian.

In light of the above circumstances, I would like to seek clarification on the following:-

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• Given that my father’s will still reflects my old Malaysian NRIC number, can I still inherit the palm oil estate without any amendment to the will?
• As a Singapore citizen, are there any legal restrictions on owning or selling this land? Is there a minimum holding period before I am permitted to dispose of it?
• If I decide to sell my share in the future, what Real Property Gains Tax (RPGT) would apply, and how would it be calculated?

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I look forward to your advice. Thank you.”

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Answer:-

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1.    Under Malaysian law, a will remains valid as long as the testator has identified the beneficiary by name and NRIC number held at that time. A subsequent change in the beneficiary’s citizenship would not invalidate the will or affect that beneficiary’s right to inherit. This is because the beneficiary’s entitlement arises from the terms of the will itself, not from his citizenship status at the time of inheritance.

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2.    However, during the property transfer process, a foreign beneficiary must still provide the necessary documents to establish that he is the same individual named in the will. Typically, the following documents will be required, and the beneficiary must also sign a Statutory Declaration confirming his identity:

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• A photocopy of his original Malaysian NRIC
• Proof of renunciation of Malaysian citizenship (e.g., Borang K)
• A Statutory Declaration confirming that he is the same person identified in the will

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3.    With respect to the query on whether any inheritance tax applies to foreigners and whether there are restrictions on owning Malaysian properties, the position is as follows.:

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4.    Malaysia previously imposed estate duty, but this tax was abolished in 1991. Accordingly, beneficiaries, whether Malaysian or foreign, are not required to pay inheritance tax on inherited real property.

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5.    However, before a foreign beneficiary can inherit the real estate, State Authority Consent must be obtained pursuant to the National Land Code. This is a mandatory requirement for the transfer of property to a non-citizen. The foreign beneficiary should be aware that additional fees and administrative charges will be imposed by the State Authority as part of this consent process.

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6.    With respect to whether there is a minimum holding period for a foreign beneficiary before disposing of inherited property, Malaysian law does not impose any such requirement. However, if the property is sold shortly after inheritance, Real Property Gains Tax (RPGT) will be chargeable, and the applicable rate will depend on the duration of ownership.

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7.    According to Malaysia’s Budget 2024 announcement, the RPGT rates for foreign citizens are as follows:-

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8.     Therefore, if the Singaporean beneficiary sells the palm oil estate within the fourth year after inheriting it, he will be subject to RPGT at the rate of 30%. The taxable gain is calculated based on the difference between the property’s market value at the time of inheritance (this will be assessed by LHDN) and the eventual selling price. If the property is sold 10 years after inheritance, a minimum RPGT rate of 10% will still be chargeable. Please note that RPGT rates are subject to change depending on the Federal Government’s policy at the relevant time, and they may be increased or reduced in the future.

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9.    For Malaysian citizens, the RPGT rates chargeable are comparatively lower, as shown below:-

10.     This wraps up our legal explanation on inheritance laws today. If you are looking for an inheritance lawyer in Johor Bahru, Malaysia and would like legal assistance, feel free to reach out to us on WhatsApp: https://wa.link/q3kmv5

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