Exchange of Tax Information Rules Updated and Expanded
02 December 2021
- a duly authorised servant or agent of a government of any foreign territory outside Malaysia with which the Malaysian Government has entered into an arrangement (as discussed below) (‘competent authority’) to request the Director General of Inland Revenue (‘DGIR’) to provide the information specified in the tax information rules (e.g. see rule 3(2) of the 2021 Rules) (‘relevant information’) in respect of a person who is being examined or investigated by the competent authority of the foreign jurisdiction (‘relevant person’);
- the DGIR by written notice to require the relevant person to provide the relevant information within the time specified in the DGIR’s notice; and
- the DGIR to require a bank (see below) to provide the relevant information to the DGIR either after the relevant person has failed to provide the relevant information to the DGIR or without having made a request to the relevant person.
The 2021 Rules have updated and expanded on the 2011 Rules in the following respects:
- updating the references to the laws which have been replaced by other laws since the 2011 Rules came into operation, i.e. by replacing the references to the Banking and Financial Institutions Act 1989 (‘BAFIA’) and the Islamic Banking Act 1983 (‘IBA’) with the Financial Services Act 2013 (‘FSA’) and the Islamic Financial Services Act 2013 (‘IFSA’) respectively;
- updating and expanding the definition of a ‘bank’ which under the 2011 Rules only referred to three categories of institutions, namely: (i) a bank, finance company or a banking and finance company licensed or deemed licensed under BAFIA; (ii) an Islamic bank licensed or deemed licensed under the IBA; and (iii) a prescribed institution under the Development Financial Institutions Act 2002 (‘DFIA’). The expression ‘bank’ in the 2021 Rules now refers to:
- a bank, finance company or a banking and finance company licensed or deemed licensed under the FSA;
- an Islamic bank licensed or deemed licensed under the IFSA;
- a prescribed institution under the DFIA;
- a Labuan company or bank licensed under the Labuan Financial Services and Securities Act 2010; and
- a Labuan company or bank licensed under the Labuan Islamic Financial Services and Securities Act 2010; and
- expanding the scope of the 2021 Rules to apply to information under any of the following arrangements:
- the Convention on Mutual Administrative Assistance in Tax Matters;
- any arrangements with participating jurisdictions to improve international tax compliance through (i) any bilateral or multilateral tax convention; (ii) any bilateral or multilateral competent authority agreements; or (iii) any tax information exchange agreement.
The 2011 Rules only applied information requested by a competent authority under a double taxation arrangement entered into by the Malaysian Government with the government of a territory outside Malaysia pursuant to section 132 of the Income Tax Act 1967.
Comment
The 2021 Rules are welcomed as it enables the law to catch up with the developments in tax information exchange matters since the 2011 Rules came into operation.
Alert prepared by Desmond Liew (Senior Associate) of the Tax Practice and Faith Chan (Associate) of the Corporate Practice of Skrine.
This alert contains general information only. It does not constitute legal advice nor an expression of legal opinion and should not be relied upon as such. For further information, kindly contact skrine@skrine.com.