Filling of notification on Country-by-Country Reporting
Country-by-country reporting (“CbCR”) has been implemented in Malaysia with effect from 1 January 2017. CbCR in Malaysia is governed under the Income Tax (Country-by-Country Reporting) Rules 2016 and Income Tax (Country-by-Country Reporting) (Amendment) Rules 2017 (collectively referred to as “CbCR Rules”).
Further, the Labuan Business Activity Tax (Country-by-Country Reporting) Regulations 2017 (referred herein as “Labuan CbCR Regulations”) has been gazetted on 26 December 2017. The requirement of Country-by-Country Reporting Rules will be applicable to the Labuan entities regulated under the Labuan Business Activity Tax Act 1990.
The CbCR Rules/ Labuan CbCR Regulations apply to the following MNE Groups with total consolidated group revenue in the financial year (“FY”) preceding the reporting FY of at least Malaysian Ringgit (“RM”) 3 billion.:
• For Malaysian entity, MNE headquartered in Malaysia and surrogates; or
• For Labuan Entity, MNE Groups where its ultimate holding entity or any of its constituent entities is a Labuan entity carrying on a Labuan business activity.
Notification on CbCR
The CbCR Rules/ Labuan CbCR Regulations state that any constituent entity of a MNE Group that is resident in Malaysia/ which is a Labuan entity carrying on a Labuan business activity shall notify the Director General in writing if it is the ultimate holding entity (or the surrogate Malaysian holding entity), on or before the last day of the reporting FY.
Therefore, MNE Groups whose ultimate holding entities are Malaysian residents/ Labuan entity carrying on a Labuan business activity would need to inform the Director General that it is the reporting entity for its Group.
Where a constituent entity of a MNE Group that is resident or a permanent establishment in Malaysia/ which is a Labuan entity carrying on a Labuan business entity is not the reporting entity, the constituent entity shall notify the Director General in writing of the identity and tax residence of the reporting entity, on or before the last day of the reporting FY.
Therefore, each entity in Malaysia/ Labuan entity which is part of the MNE Group that exceeds the RM 3 billion threshold, whether the Group is Malaysian or foreign owned would also need to inform the Director General on who the reporting entity of the Group would be.
Sample Notification Letter
The MIRB had released sample notification letters for the convenience of taxpayers. Please click on the following link to download a copy of the letter:
• Notification letter of Reporting Entity
• Notification letter of Non-Reporting Entity
CbCR notification filling deadline
If your Company is subjected to the CbCR Rules, you should identify the reporting entity for the Group and notify the Director General in writing before the stipulated deadline.
As prescribed in the CbCR Rules/ Labuan CbCR Regulations, the deadline to file the CbCR notification would be on or before the last day of the reporting FY.
Having said that, if the information of the Reporting Entity is available now, it is advisable that your Company file the CbCR notification as early as possible, regardless of which reporting FY of the MNE Group is.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
If you require further information or clarification on CbCR requirements, please contact Mr Bob Kee at +603 7721 7029, Ms Chang Mei Seen at +603 7721 7028, or Mr Ivan Goh at +603 7721 7012.