On January 1, 2019, Malaysia’s Inland Revenue Board (IRB) published Country-by-Country Reporting Guidelines.
In Malaysia, country-by-country (CbC) reporting is governed by two separate laws; one that applies only to Labuan entities carrying on a Labuan business activity in the Federal Territory of Labuan and the other that applies to non-Labuan entities. These laws are:
- Income Tax (Country-by-Country Reporting) Rules 2016, which came into force on January 1, 2017 and were amended on December 27, 2017 through Income Tax (Country-by-Country Reporting) (Amendment) Rules (the “Rules”).
- Labuan Business Activity Tax (Country-by-Country Reporting) Regulations 2017, which came into force on December 26, 2017 (the “Labuan Regulations”).
The implementation of CbC reporting became effective for financial years beginning on and after January 1, 2017. The CbC report will be exchanged with relevant tax authorities that have an International Agreement and a qualifying Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports (CbC MCAA) in place with Malaysia.
The Rules apply to an MNE Group that satisfies both of the following conditions:
- Has total consolidated group revenue in the financial year preceding the first reporting financial year of at least three billion ringgit (RM3 billion).
Any of its constituent entities is one of the following:
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- An ultimate holding entity incorporated, registered or established or deemed to be incorporated, registered or established, and resident, in Malaysia.
- Is incorporated, registered or established or deemed to be incorporated, registered or established outside Malaysia and resident in Malaysia.
- Is a surrogate holding entity incorporated, registered or established or deemed to be incorporated, registered or established, and resident, in Malaysia.
- Has a permanent establishment in Malaysia.
The Labuan Regulations apply to an MNE Group that satisfies both of the following conditions:
- Has total consolidated group revenue in the financial year preceding the first reporting financial year of at least three billion ringgit (RM3 billion).
- Its ultimate holding entity or any of its constituent entities is a Labuan entity carrying on a Labuan business activity.
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