The Inland Revenue Board of Malaysia has updated its guidance on the Pillar Two Global Minimum Tax (GMT) regarding its administration and interpretation, which goes into force on 1 January 2025.
The updates include newly released Guidelines on the Implementation of GMT in Malaysia and a revised version of the GMT FAQ, published on 2 December 2024.
The guidance outlines the scope, filing requirements, transitional penalty relief measures, and available safe harbours.
Pillar Two puts a floor on tax competition on corporate income tax through the introduction of a global minimum corporate tax rate that countries can use to protect their tax bases. The Global Anti-Base Erosion (GloBE) Rules are the main Pillar Two Rules which set out the scope and mechanism of the new global minimum effective tax rate (ETR) of 15%. A top-up tax will be charged when the group’s ETR in a jurisdiction falls below the 15% level.
Previously, Malaysia’s Dewan Rakyat or the House of Representatives, passed the Finance (No. 2) Bill 2023, on 28 November 2023, which included the Implementation Of Domestic Top-Up Tax And Multinational Top-Up Tax to the Income Tax Act 1967 and Pillar Two GloBE Rules.
