Malaysia joins grouping to fight tax avoidance
PETALING JAYA: Malaysia has joined a grouping of over 100 countries in working together to close the gaps that allow profit of multinational corporations to be artificially shifted to low- or no-tax jurisdictions.
Second Finance Minister Datuk Johari Abdul Ghani made the announcement of Malaysia’s entry into the Inclusive Frameworks (IF) for the global implementation of the Base Erosion and Profit Shifting (BEPS) Action Plan, during the Second IF meeting at the Organisation for the Economic and Cooperation Development (OECD) headquarters in Paris last week.
BEPS refers to tax planning strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low- or no-tax locations where there is little or no economic activity. Although some of the schemes used are illegal, most are not.
The Finance Ministry said in a statement released last Friday that Malaysia, as a BEPS associate, moves forward to be at equal footing with the OECD countries and has direct influence in shaping international tax rules to tackle BEPS issues.
Together with the other jurisdictions, Malaysia will help and collaborate to implement and monitor phases of the BEPS Action Plan, especially on the four minimum standards, namely the standards on countering harmful tax practices, preventing treaty abuse, country-bycountry reporting and enhancing dispute resolution.
During the session, Malaysia reiterated its commitment to fully comply with international tax standards, especially in the areas of automatic exchange of information.
To date, Malaysia is a signatory to the Multilateral Competent Authority Agreement on Common Reporting Standards and Country by Country Reporting as well as the Convention on Mutual Administrative Assistance in Tax Matters.
Malaysia is expected to do its first exchange of information for tax purposes with the other participating jurisdiction in January 2018 under these initiatives.