Malaysia Inheritance and Gift Tax Guide 2026

No Inheritance Tax (Estate Duty Abolished 1991)

Malaysia abolished estate duty (Cukai Harta Pusaka) effective 1 November 1991. Since then:

• There is no tax imposed on the estate of a deceased person
• Heirs inherit assets free from any death tax
• There is no inheritance tax in any form — no estate duty, no capital gains tax on death (deemed disposal does not apply), no succession tax
• Assets pass to beneficiaries at the value applicable for the purpose of probate or distribution, with no LHDN filing required

This makes Malaysia an exceptional jurisdiction for wealth preservation across generations. High-net-worth individuals with Malaysian assets pay zero death duties — a significant advantage over the US (40% federal estate tax), UK (40% inheritance tax), Japan (up to 55%), South Korea (up to 50%), and many European countries.

No Gift Tax

Malaysia does not impose a gift tax. Transfers of assets during a person's lifetime are generally free from tax. However, there are two important considerations:

• RPGT on property gifts: If real property is gifted, the transaction may be treated as a disposal at market value for Real Property Gains Tax (RPGT) purposes. The donor may be liable for RPGT on the deemed gain (market value minus acquisition cost). Exemptions apply for gifts between spouses and certain family transfers.
• Deemed income: If a gift is made in the course of a business (e.g., a company gifting assets to a director), it may be treated as income in the hands of the recipient.
• Stamp duty on gifts: The transfer of property by way of gift may attract nominal stamp duty (typically MYR 10 or a nominal amount) rather than the full ad valorem rates, depending on the relationship between the donor and donee.

For cash gifts, shares, and most movable assets, no tax implications arise. This makes Malaysia highly attractive for intergenerational wealth transfer.

Estate Administration Process

While there is no tax on the estate, certain costs and fees are involved in administering and distributing an estate in Malaysia:

Grant of Probate or Letters of Administration: Required to administer the estate. The process involves:

• Application to the High Court (or Land Office for small estates under MYR 2 million for Malay/Muslim estates under AMANAH Raya)
• Publishing a statutory notice in the newspaper
• Submitting an inventory of assets and liabilities
• Obtaining the grant (typically 3-6 months for straightforward estates)

Probate fees: Court fees for the grant of probate are based on the value of the estate (typically 0.5–1% of estate value with caps).

Executors'/Trustees' fees: Professional executors/trustees (such as AMANAH Raya) charge 1–5% of the estate value. Individual executors (family members) usually charge no fee.

Lawyer's fees: Legal fees for probate administration vary but are typically 0.5–3% of estate value depending on complexity.

AMANAH Raya — Small Estate Distribution

AMANAH Raya Berhad is a trust company wholly owned by the Government of Malaysia that provides estate administration services. For small estates (typically under MYR 2 million for Muslim estates under the Small Estates Distribution Division of the Land Office), AMANAH Raya can act as administrator or executor at competitive rates. AMANAH Raya is particularly used for:

• Muslim estates (Faraid) — AMANAH Raya has specific expertise in Islamic inheritance distribution
• Estates where beneficiaries are minors
• Complex estates with multiple asset classes
• Trust creation under wills

The Small Estates (Distribution) Act 1955 governs estates of deceased persons with total value not exceeding MYR 2 million, where the deceased was Muslim. The Land Office (Pejabat Tanah) handles the distribution of such estates.

Islamic Inheritance (Faraid)

For Muslims in Malaysia, inheritance is governed by Islamic law (Faraid) and state-level Islamic enactments. Key features:

• Fixed shares are prescribed for specific heirs (spouse, children, parents)
• Male heirs typically receive double the share of female heirs of the same class
• A will (Wasiat) can only dispose of up to one-third of the estate to non-compulsory heirs
• The remaining two-thirds is distributed according to Faraid among compulsory heirs
• Non-Muslims may inherit from Muslims only if permitted under state law

Non-Muslims in Malaysia are free to distribute their estate by will as they wish, subject to the Distribution Act 1958 (or relevant state law in Sabah and Sarawak) for intestate succession.

Wealth Structuring and Estate Planning

Despite the absence of inheritance tax, proper estate planning is important to:

• Avoid delays in the estate administration process (which can take 6–18 months)
• Minimise probate and legal fees
• Ensure assets pass to intended beneficiaries efficiently
• Address any RPGT implications on property transfers
• Consider the use of trusts (including Labuan trusts) for larger estates

Tools such as a properly drafted will, nomination (for EPF, insurance policies), and joint ownership with survivorship rights can streamline the transfer of assets.

FAQs

Do I have to pay inheritance tax in Malaysia?

No. Malaysia abolished estate duty in 1991. There is no inheritance tax, estate tax, or death duty of any kind.

Is there a gift tax in Malaysia?

No there is no gift tax. However, if you gift real property, RPGT may apply on the deemed gain. Gifts between spouses are generally exempt from RPGT.

What costs are involved in estate administration?

The main costs are probate court fees (0.5-1% of estate value), executor/trustee fees (1-5% for professionals), and legal fees (0.5-3%). For small estates, AMANAH Raya offers affordable administration services.

How does Faraid affect Muslim estates?

Muslims in Malaysia must distribute their estate according to Faraid (Islamic inheritance law), which prescribes fixed shares for heirs. A will (Wasiat) can only cover one-third of the estate for non-compulsory heirs.

Disclaimer

This guide provides general information about Malaysian inheritance and gift tax for the 2026 tax year. Tax laws may change. This is not legal advice — always consult with a qualified lawyer, estate planner, or AMANAH Raya for advice specific to your situation. InvestmentKit does not provide legal or tax advice.