As published on themalaysianreserve.com, Tuesday 2 August, 2022.
Malaysia is actively following the developments of Organisation for Economic Co-operation and Development’s (OECD) proposal to impose a global minimum tax rate of 15% on multinational corporations (MNCs) starting from 2023, according to the Ministry of Finance.
Deputy Finance Minister Datuk Mohd Shahar Abdullah said the OECD announced that 136 nations have agreed on a comprehensive reform of the international tax system that will mandate a 15% minimum tax rate on some MNCs starting in 2023, and reallocate more than US$125 billion (RM557 billion) in profits from about 100 of the largest and most profitable MNCs in the world to all nations.
He added that this is to ensure that businesses pay a fair share of tax wherever they operate and generate profits.
“Instead of attempting to end tax competition, the global minimum tax agreement imposes multilaterally agreed-upon restrictions on it.
“To ensure that multinationals pay the right taxes where they are due, the government through HASiL will continue to develop comprehensive strategies in dealing with international tax compliance risks, that includes calling for greater disclosures and transparency by MNCs,” he said while speaking at the National Tax Conference 2022 in Kuala Lumpur today.
Additionally, Mohd Shahar said at the international level, Malaysia has always been responsive to current changes in the internationally agreed tax standards to ensure a competitive environment to attract foreign and domestic direct investments and to prevent cross-border tax evasion activities.
He urged the government to strengthen existing tax systems to increase their effectiveness and generate the necessary domestic resources to meet the Sustainable Development Goals and support inclusive economic growth.
“Creating an efficient tax system means taxing in better ways rather than just imposing new taxes. This means we should introduce more effective laws and policies and at the same time fight tax evasion and avoidance.
“We must continue to cooperate in establishing a fair and efficient international tax system that includes combating tax evasion and tax avoidance,” he said.
Commenting further, Mohd Shahar highlighted that HASiL managed to deliver a tax collection figure of more than RM140 billion in 2021, despite the crippling financial effect of the Covid-19 pandemic, combined with unforeseen natural disasters by the end of 2021.
He noted that this achievement by HASiL has made it possible for the government to undertake a variety of economic recovery initiatives, encourage development, and ensure long-term sustainability throughout the year 2022 and beyond.
He also welcomed the steps taken by HASiL in engaging all stakeholders in an accommodative manner and drawing up sound tax strategies based on the Awareness, Education and Services approach, which boils down to the aim of building a noble tax environment and enhancing voluntary tax compliance in the Malaysian community.
Meanwhile, Inland Revenue Board CEO Datuk Mohd Nizom Sairi said this year alone, HASiL has conducted and participated in numerous engagement as well as education and awareness programmes not only through conventional methods but also via online and social activities which enable greater engagement with the public.
He said it was designed to provide the public with a clearer understanding that having accountable and transparent tax governance in place is a necessity for building a sustainable tax environment in Malaysia.
“As a direct tax administrator, we will carry out our duties with professionalism, integrity and based on procedures in place.
“The result for us would be to see increased tax compliance in the country, where taxes will be the backbone of nation-building,” he said while delivering his opening address at the conference.
The National Tax Conference 2022 is the largest tax conference for tax technical updates in Malaysia.
The theme of this year’s conference, “The Role of Taxation in Post-Pandemic Recovery,” clearly sets out the importance of taxes in rebuilding the nation.
Mohd Nizom said it is a realisation that tax revenue is crucial to finance and maintain national development, growth and prosperity, especially post-Covid-19 pandemic.
Over the next two days, invited moderators, speakers and panellists will share their knowledge, experiences and best practices in their respective areas of expertise.
Topics chosen for this year’s conference provide a setting for speakers, moderators and panel members to deliberate and analyse tax-related issues during this post-pandemic recovery period.
The conference promises to deliver a whole lot of information and ideas that will greatly benefit all categories of taxpayers, tax practitioners as well as HASiL and Chartered Tax Institute of Malaysia.