Malaysia commits to international tax standards

Malaysia commits to international tax standards

Malaysia, in principal, has committed to implement and adhere to Base Erosion and Profit Shifting (BEPS) Action Plan. It has officially joined the OECD Inclusive Framework on BEPS as Associate Members. The framework emphasises on four minimum standards:

• Action 5 – Countering Harmful Tax Practices More Effectively, Taking into Account Transparency and Substance

• Action 6 – Preventing the Granting of Treaty Benefits in Inappropriate Circumstances

• Action 13 – Guidance on Transfer Pricing Documentation and Country-by-Country Reporting

• Action 14 – Making Dispute Resolution Mechanisms More Effective

In addition, the Forum on Harmful Tax Practices (FHTP) has identified certain Malaysian incentives for evaluation on the basis that it provide preferential regimes for mobile geographical services activities related to intellectual property and non-intellectual property. The incentives are as follows:

Intellectual property incentives

Non-intellectual property incentives

Principal Hub
Pioneer Status (High Technology)
Biotechnology Industry (BioNexus)
MSC Malaysia

Biotechnology Industry (BioNexus)
MSC Malaysia
Principal Hub
Pioneer Status (Contract R&D)
Treasury Management Centre
Economic Development Regions [Iskandar Malaysia (IM), East Coast Economic Region (ECER), Sabah Development Corridor (SDC)]
Approved Services Project
Green Technology Services
Labuan Leasing Services
Foreign Fund Management
Inward re-insurance and offshore insurance
Malaysian International Trading Company

The Ministry of Finance (MoF) has released timelines where the above mentioned tax incentives shall be amended to meet the FHTP criteria. The Ministry of Finance is working with the Inland Revenue Board and related ministries/agencies to review the incentives in order to meet the criteria set under the FHTP.

Kindly visit the MoF website for further information.

Source: MoF website, 12 June 2018

Director charged for sales tax evasion, 09 June 2017

Director charged for sales tax evasion, 09 June 2017

A logistics company director was charged for submitting false sales tax declaration on contact lenses worth RM2.88m two years ago. The director was charged for:

• submitting declarations amounting to RM29,494.03 when the actual tax should have been RM311,052.75, and

• falsely declaring 10,817 boxes of imported contact lenses when 129,818 were brought into the country.

He pleaded not guilty.

Source: Malay Mail Online, 7 June 2017