KUALA LUMPUR, June 8 — Professional services firm Deloitte is advising large Malaysian-based multinational companies (MNCs) and foreign-based MNCs that have operations in Malaysia to be fully aware of the impact of global minimum tax (GMT) and start preparing for it.

South-east Asia international tax leader Tan Hooi Beng and Malaysia international tax director Kelvin Yee said this is following the Ministry of Finance’s (MoF) recent 2023 pre-budget statement, which stated that Malaysia is currently reviewing the technical details of GMT, including the Qualified Domestic Minimum Top-up Tax (QDMTT) "While Malaysia is not a member of the Organisation for Economic Co-operation and Development (OECD), it is a member of the OECD’s Inclusive Framework.

"Hence, there is an expectation that it will support and implement GMT and there is also no reason for Malaysia to avoid GMT implementation as the taxes that could have been collected here will be ceded to other jurisdictions,” they said in a statement today.

They said although Malaysia acknowledged the OECD’s original plan of implementing the GMT in 2023 with all rules operating as "top-up” to a minimum tax of 15 per cent, the country would need to amend its domestic tax legislation to implement this.

"A point to note is that there is a plan for the European Union to defer this by one year. It remains to be seen how this will affect Malaysia’s roadmap on GMT,” they said.

According to Tan and Yee, GMT is a once-in-a-lifetime global tax reform that is meant to end tax competition and profit shifting.

GMT applies to MNCs operating in at least two jurisdictions, with an annual consolidated group revenue of at least €750 million (RM3.5 billion) in at least two of the four immediately preceding fiscal years.

"It is aimed at ensuring that MNCs pay the right amount of taxes, that is at 15 per cent, regardless of where they operate,” they said.

The duo were of the view that there is no reason for Malaysia not to adopt GMT and it is just a matter of timing for the country to adopt the tax mechanism.

"The MoF’s pre-budget statement has certainly shed some light on Malaysia’s direction. Upon understanding the impact of GMT, time will be needed to configure the accounting system so that it is able to generate the data required for GMT followed by a trial run.

"All in all, the time is now for affected MNCs to act, a wait and see approach may no longer be tenable,” they added. — Bernama