25/05/2026

BIZ & FINANCE MONDAY | MAY 25, 2026

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Do not overlook taxation issues in succession planning

Stronger results in first quarter as construction momentum accelerates PETALING JAYA: Malaysian Resources Corporation Bhd (MRCB) reported a 46% increase in revenue to RM319.2 million and an 87% growth in profit before tax to RM9.1 million in the first quarter of 2026, compared with the corresponding period in 2025. The stronger performance was driven by improved contributions from the engineering, construction and environment (ECE) division, largely from the recently com pleted LRT3 project and higher revenues from the Kompleks Sukan Shah Alam redevelopment project. Construction revenues will grow further in 2026, with the construction of the five reinstated LRT3 stations and other related infrastructure works, which will commence in the current quarter. The property development and investment division recorded revenue of RM40.8 million and an operating loss of RM8.9 million in Q1 2026. The lower revenue and higher operating loss were primarily due to reduced contri butions from completed develop ments, namely Sentral Suites, VIVO 9 Seputeh, TRIA 9 Seputeh and Alstonia in Bukit Rahman Putra, where inventories of completed units available for sale continued to deplete. The division is targeting property sales of RM800 million in 2026, split equally between developments in Malaysia and its international projects, namely Maris and Vista in Gold Coast, Australia, and The Symphony Centre in New Zealand. In Malaysia, the group has RM2.2 billion in property launches planned for 2026, subject to obtaining the necessary approvals. The ECE division recorded revenue of RM257.9 million in Q1 2026, a 69% increase from the corresponding period in 2025. The division’s operating profit rose more than threefold to RM38.6 million. Revenue contributions were mainly derived from the LRT3 project, which achieved overall physical and financial progress of 99.8% and 99.9%, respectively, and the redevelopment of Kompleks Sukan Shah Alam. Other contributions came from the Muara Sungai Pahang Phase 3 (Package 3) and Sungai Langat Phase 2 flood mitigation projects, and the North-South Expressway Phase 1 (Package B) highway widening project. Contributions from the reinstatement of five LRT3 stations and other related infrastructure works remained minimal during the quarter, however, following receipt of the notice to proceed with the project, works will shortly begin, and revenue recognition will accelerate as construction activities gain momentum.

PETALING JAYA: Boustead Heavy Industries Corporation (BHIC) returned to profitability in the first quarter ended March 31, 2026 (Q1’26), driven by improved cost management and stronger contributions from joint venture companies. For the quarter, the group recorded revenue of RM29.7 million, compared with RM44.5 million in the corresponding quarter last year, reflecting lower activity following the completion of major submarine related projects. Despite the lower revenue, BHIC delivered a profit before tax of RM0.5 million, a significant turnaround from a loss before taxation of RM4.8 million previously. Profit after tax stood at RM0.1 million, compared to a loss of RM5.2 million in Q1’25. The improvement in earnings was In recent years, succession planning has become increasingly important from a tax perspective. The introduction of new tax measures, such as capital gains tax, dividend tax on dividend income exceeding RM100,000, taxation of foreign sourced income remitted into Malaysia, increased scrutiny of stamp duty matters, as well as the widening scope of the sales and service tax regime, has prompted advisers to place greater emphasis on tax considerations when structuring family wealth and business succession arrangements. Common structures In the early stages, many family MANY local companies in Malaysia, including listed ones, remain family controlled. These businesses are often founded and managed by first-generation patriarchs, with ownership and leadership subsequently retained within the family. In Asia, families generally prefer to maintain long-term control over their businesses, even where professional managers are appointed to handle the day-to day operations. This differs from the more common western model, where families gradually detach themselves from management responsibilities over time. to understand systems, identify gaps, and try to work around the controls that are being put in place. So it becomes a continuous race on both sides.” Against that backdrop, Rangel said the fundamentals remain unchanged, adding that strong compliance frame works and clear regulatory pro cesses are still the backbone of fraud prevention. “At the core, you still need very

as to whether the succession structure should be established in jurisdictions offering more favourable tax regimes, such as Labuan, the single-family office scheme in Johor, Singapore or other suitable jurisdictions. A key consideration is whether distributions to beneficiaries can be made in a tax-efficient manner, including with minimal or no tax leakage. Families will generally prefer jurisdictions that do not impose inheritance tax, estate duty or significant withholding taxes. In addition to tax considerations, the chosen jurisdiction should ideally provide regulatory certainty, efficient administration and flexibility in the movement of funds. Importantly, such family wealth structures should not exist merely on paper.

businesses are structured through companies owned personally by the founders, often husband and wife. As the businesses expand, different separate companies. Over time, assets, liabilities and income streams accumulate across multiple entities within the group. As the structure becomes more complex, families often seek to streamline their business and investment holdings into a more organised structure to facilitate succession planning and long-term wealth preservation. This may involve the establishment of a holding company, trust or foundation. Such restructuring exercises may involve transfers of shares, assets, liabilities and income-generating businesses between entities or family members. These transfers may trigger various tax implications, including capital gains tax, real property gains tax, stamp duty, income tax and indirect tax considerations. operations and investments are gradually placed under

reinvestment allowances, investment tax allowances and other available tax incentives. The restructuring of business operations and income flows should be aligned with the future utilisation of these tax attributes to avoid unintended loss of tax benefits. Where income-generating assets or businesses are transferred within the group, consideration should be given to whether the transfer would give rise to taxable income or whether it may be regarded as a capital transaction, which would generally fall outside the scope of income tax unless it is subject to capital gains tax or Real Property Gains Tax. Stamp duty The transfer of assets and liabilities pursuant to restructuring agreements may trigger stamp duty implications. This can become costly where the transaction is treated as a conveyance of a business, which may attract stamp duty at rates of up to 4%. Accordingly, the restructuring exercise should be carefully planned to maximise the availability of reliefs and exemptions. This is particularly relevant where assets and liabilities are transferred from operating companies into a holding company, trust, or foundation structure. Location of holding company or trust/foundation Consideration should also be given

What are the tax issues? Income Tax Tax authorities expect these structures to demonstrate sufficient commercial substance, including the presence of offices, employees, management functions, and proper decision-making processes. This is particularly important to support the legitimacy and tax residency position of the holding company, trust or foundation. This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com). Boustead Heavy Industries returns to profitability in Q1 Before undertaking any restructuring exercise, it is important for the group to review its existing tax position, including brought forward losses, unabsorbed capital allowances,

primarily driven by lower operating costs and improved performance from joint venture entities, which

revenue moderated following the completion of key submarine-related works, the group has demonstrated

and business cycles. “As part of the Boustead and LTAT ecosystem, BHIC continues to play a strategic role in supporting national defence capabilities while contributing towards long-term value creation for LTAT, ultimately benefiting members of the Armed Forces and veterans. Moving forward, the group remains focused on strengthening strategic partnerships, enhancing industrial capabilities and supporting Malaysia’s broader defence industrialisation agenda in line with national priorities.” Barring unforeseen circumstances, BHIC expects operating conditions to remain stable in 2026 as the group advances its strategic initiatives, invests in capability development and strengthens its participation across the broader defence ecosystem. strengthen its ability to support clients in Malaysia by drawing on international experience. “We’ve been around for nearly 50 years and operate in about 100 countries. That gives us a very broad base of experience. When we see what works in the Americas, Europe, Latin America, India, and other markets, we are able to take those best practices and apply them in Malaysia in a way that is relevant to the local environment,” Rangel said.

contributed RM1.6 million in profit, compared to a loss contribution of RM1.2 million in the same period last year. From an operational perspective, the group recorded a substantially narrower earnings before interest, taxation, depreciation and amortisation loss of RM0.5

resilience by returning to profitability. The positive contribution from our joint ventures, particularly in the aerospace segment, underscores the importance of our diversified portfolio and collaborative model. We remain focused on strengthening our core capabilities while expanding

million, compared to RM3.2 million previously, reflecting stronger cost discipline and optimisation efforts. BHIC CEO Feroz Razi Ramli ( pic ) said, “Our first-quarter performance reflects a disciplined approach to cost management and a continued focus on operational efficiency. While clear processes. Know-your-customer standards, identity verification and regulatory checks are not optional. “Before anything else, you need to be certain about who you are dealing with. Only then do you move into more advanced use cases or personalised services,” he said. Rangel pointed to anomaly detection as one of the practical applications of AI to strengthen fraud controls, particularly for flagging

into adjacent defence segments.” Boustead Holdings Bhd group managing director Datuk Indera Dr Ahmad Sabirin Arshad said, “BHIC’s performance reflects the importance of building a resilient and sustainable defence industry ecosystem that extends beyond individual projects activity that falls outside expected behavioural patterns. “You can set thresholds and look for deviations. If something falls outside the normal pattern, the system should flag it so you can investigate further. It might be fraud, or it might just be a legitimate but unusual transaction. The key is having the ability to distinguish between the two through deeper analysis,” he said. He added that TP’s long operating history and global footprint

Strong compliance frameworks, clear regulatory processes key to preventing fraud

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