KUALA LUMPUR: Multinational corporations (MNCs) should prepare for the potential implementation of the global minimum tax (GMT) in 2024, said Deloitte Malaysia and Southeast Asia international tax leader Tan Hooi Beng.
“While Singapore, Hong Kong, and Thailand have deferred their implementation to 2025, South Korea, the UK, Japan, Australia, Canada, the European Union and Switzerland, among others, have chosen 2024 as their starting year,” he said.
GMT applies to MNCs operating in at least two jurisdictions, with an annual consolidated group revenue of at least 750 million euros (RM3.7 billion) in at least two of the four immediately preceding fiscal years.
In August 2022, Malaysia had agreed in principle to implement a 15% GMT on certain MNCs to ensure that businesses pay fair taxes and avoid tax leakages.
The global tax was instituted by the Organization for Economic Cooperation and Development, which said 136 countries, including Malaysia, were ready to undertake reforms in the global taxation system.
However, it is not known when the GMT will be officially implemented in Malaysia.
Ensure proper implementation
As the market waits for a firm 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.
Even if no top-up tax is required, various compliance obligations need to be met, Tan said, adding that since GMT is a form of taxation, the knee-jerk reaction is that the tax division must be responsible.
“Only a well-coordinated approach will ensure a successful GMT implementation,” he added.
Source: https://www.freemalaysiatoday.com/category/highlight/2023/05/31/mncs-should-gear-up-for-global-minimum-tax-says-deloitte-malaysia/