The Inland Revenue Board of Malaysia (IRBM) announced that it has updated its guidance page regarding the implementation of the Pillar Two global minimum tax rules.
Two new key additions to the page include the implementation timeline of global minimum tax (GMT) in Malaysia and a FAQ section.
Implementation Timeline of Global Minimum Tax (GMT) in Malaysia
IRBM published an infographic with key dates for the implementation of the Pillar Two GloBe rules.
1 January, 2025, is the Effective Date for MNE groups with a consolidated financial statement period beginning on or after 1 January, 2025.
31 December, 2025, is the closing date for the first MNE group’s consolidated financial statement for the year 2025.
30 June, 2027, is the submission of the Top-up Tax Return (TTR), the Information Return (GIR), and the payment of the top-up tax.
January, 2028, is proposed for a risk assessment and audit review process.
Frequently Asked Questions (FAQ) on GMT
1. The Global Minimum Tax (GMT) in Malaysia will take effect on 1 January, 2025. What does it mean when we say 1 January, 2025, is the implementation date?
The GMT will take effect for MNE groups whose financial years begin on and after 1 January, 2025. So, 1 January, 2025, will be based on the financial year of an MNE Group. The initial submission of GIR and TTR (Top-up Tax Return) will be 18 months from the year ending, or 30 June, 2027.
2. What is your advice to businesses in getting ready for the implementation of GMT?
Businesses are advised to:
- Determine if your businesses or companies are members of an MNE Group within the scope of GMT.
- Since the GMT threshold is similar to the Country-by-Country Reporting (CbCR); threshold, businesses or companies who are part of an MNE Group subject to the CbCR Rules may also be subject to GMT.
- Perform an impact assessment to evaluate whether your businesses or companies on the entity and jurisdictional level are expected to be liable for the top-up tax under GMT.
- If the businesses or companies are subject to GMT, particularly if they are part of a foreign MNE Group, they have to inform their parent entity of the implementation of Pillar Two in Malaysia beginning in 2025. Calculating the top-up tax requires information at the group and jurisdictional levels that the businesses or companies may not have access to.
3. In Malaysia, will HASiL provide some leeway in the initial years of implementation?
With reference to the Finance (No. 2) Bill 2023, we can observe the types of offenses and relevant penalties which will be imposed if MNE groups fail to comply with the GMT legislation such as penalties for late or non-compliance with the requirement for the submission of relevant returns.
As for the current approach that HASiL took to promote tax compliance through its awareness, education and services (AES) initiative, HASiL will gladly follow the penalty relief provision proposed by OECD under a Transitional Penalty Relief.
