PETALING JAYA: Taxpayers should prepare for any eventuality, including a 2024 implementation of the global minimum tax (GMT), says Deloitte Malaysia and South-East Asia international tax leader Tan Hooi Beng.
He said GMT was arguably the largest tax reform in history and large multinational corporations (MNCs) will need to pay a minimum tax of 15% in every country in which they operate.
“In essence, an MNC is free to operate in high or low-tax jurisdictions, tax havens, and countries that offer a generous tax holiday.
“While Singapore, Hong Kong, and Thailand have deferred their implementation to 2025, South Korea, the United Kingdom, Japan, Australia, Canada, the European Union and Switzerland, among others, have chosen 2024 as their starting year,” he said.
Malaysia has basically agreed to implement a GMT of 15% on some MNCs and Malaysia is among the 136 countries announced by the Organisation for Economic Cooperation and Development previously as countries that are ready to reform the international taxation system.
The implementation of the tax system is to ensure that business entities pay taxes fairly in the host country and avoid tax leakage.
As the market waits for a firmer announcement from the Malaysian government, it is important for taxpayers to mitigate any eventualities, Tan noted.
“Large Malaysian-headquartered corporate groups, especially the listed ones, including the pension fund and certain government entities as well as inbound investments of large foreign-based MNCs are likely to be affected.
“Any top-up tax to 15% will be collected under the Qualified Domestic Minimum Top-Up Tax, followed by the Income Inclusion Rule and also the Undertaxed Profits Rule, all of which operate on highly complex mechanisms,” he said.
GMT applies to MNCs operating in at least two jurisdictions. — Bernama