FAQs on the implementation of the Global Minimum Tax (GMT) in Malaysia

• Determine whether the businesses/companies are members of a multinational group that falls within the scope of GMT;
• Conduct an impact assessment to evaluate whether your businesses or companies are likely to be subject to the top-up tax under GMT at the entity and jurisdiction level;
• If the businesses or companies are subject to GMT, especially if they are part of a foreign multinational group, they must inform their parent company of the introduction of the second pillar in Malaysia from 2025. The calculation of the top-up tax requires information at group and country level, which the businesses or companies may not have access to;
  

The IRB is in the process of drafting the GMT guidelines and intends to publish them prior to implementation in 2025.

1. ​the financial statements used to prepare the UPE consolidated financial statements for all entities in the audited jurisdiction; or 
2. individual financial statements of each sub-entity for all entities in the same audited jurisdiction, provided that they are prepared in accordance with an acceptable accounting standard or an approved accounting standard, and that the information contained in those financial statements is maintained on the basis of that accounting standard and is reliable.
   

• In the transition year in which the entity becomes subject to GMT for the first time, the deferred tax attributes in the financial statements (including unrecognized deferred tax) must be used to calculate the ETR. Deferred tax assets must be recognized at the lower of the following two rates: the minimum rate (15 %) or the applicable domestic tax rate.
  

1. The information return - is the GIR. This information return should be completed by the Ultimate Parent Entity (“UPE”) or a designated entity to disclose the details of the top-up tax calculation which is to be submitted to the HASiL. HASiL will then exchange this information with the relevant tax authorities;
   
2. The Top-up Tax Return (TTR) - must be filed by each CE in Malaysia, disclosing the tax liability of each CE. The Top-up Tax Return is intended to be a simplified return compared to the GIR.
   

• ​The template and guidance for the GIR has been published by the OECD. The TTR is intended to be a simplified declaration compared to the GIR. It serves to disclose the tax liability of each CE. As the very first TTR is not expected to be filed until 2027, guidance on this tax return will be issued in due course.
  

• The IRB will implement the penalty relief provision proposed by the OECD as part of a Temporary Penalty Relief. 
  
• Under this Temporary Penalty Relief, no penalties or sanctions should be imposed in connection with the filing of a GloBE information return during the transition period (i.e., fiscal year beginning on or before 12/31/2026 but not including a fiscal year ending after 6/30/2028) if a tax administration believes that an MNE has taken “reasonable steps” to ensure the correct application of the GloBE rules. A tax administration may consider that an MNE has taken reasonable steps if the MNE can demonstrate that it has acted in good faith to understand and comply with the relevant national application of the GloBE rules and the QDMTT. 
  
• The IRB will focus more on the Awareness, Education and Services (“AES”) approach in implementing measures to comply with the new tax legislation. The penalty relief will be set out in a GMT guidance document to be published by the IRB. Therefore, we can expect some leeway in the initial phase of GMT implementation in Malaysia.
  
• The IRB will continue to hold discussions with affected taxpayers to provide them with a technical understanding of the Global Rules and the operational aspects of the GMT, including the preparation and submission of the GIR.