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The Exchange of Tax Information Portal is an initiative of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The Global Forum conducts peer reviews of its member jurisdictions' ability to co-operate with other tax administrations in accordance with the internationally agreed standard. The standard provides for exchange of information on request where it is foreseeably relevant to the administration and enforcement of the domestic tax laws of the requesting jurisdiction. Effective exchange of information requires that jurisdictions ensure information is available, that it can be obtained by the tax authorities and that there are mechanisms in place allowing for the exchange of that information. The Global Forum's peer review process examines both the legal and regulatory aspects of exchange (Phase 1 reviews) and the exchange of information in practice (Phase 2). The EOI Portal will track the development of these peer reviews, including changes that jurisdictions make in response to the Global Forum's recommendations.

Peer Review: Peer Review Report Phase 1 Legal and Regulatory Framework - Malaysia

This report for Malaysia has been published on 26 Oct 2011. You can buy this report, or browse it online below.

Skip directly to the Executive Summary. You may also want to view the tables of determinations and ratings.


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Determinations and Recommendations

Jurisdictions should ensure that ownership and identity information for all relevant entities and arrangements is available to their competent authorities. (ToR A.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Not all nominees are required to have information available on the persons for whom they act.  An obligation should be established for all nominees to maintain relevant ownership and identity information where they act as the legal owner on behalf of any other person. 
Not all trustees are required to have information available on the identity of settlors and beneficiaries of trusts.  An obligation should be established to maintain information in all cases in relation to settlors, trustees and beneficiaries of trusts with a trustee in Malaysia. 
Jurisdictions should ensure that reliable accounting records are kept for all relevant entities and arrangements. (ToR A.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   There is no express requirement on (i) entities in the Labuan IBFC, and (ii) certain trusts that do not carry on business in Malaysia and do not derive or receive income in Malaysia, to keep underlying documentation.  There should be an express requirement for all relevant entities and arrangements to keep accounting records and underlying documentation for a minimum five year period. 
Banking information should be available for all account-holders. (ToR A.3)
Determination Factors Recommendations
The element is in place.      
Competent authorities should have the power to obtain and provide information that is the subject of a request under an exchange of information arrangement from any person within their territorial jurisdiction who is in possession or control of such information (irrespective of any legal obligation on such person to maintain the secrecy of the information). (ToR B.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   While most laws specifically require that information is kept within Malaysia, Malaysian authorities do not have the power to obtain and provide information held outside of Malaysia, even if such information is in the control of a person within its territorial jurisdiction.  Malaysia should ensure that it has the power to access information sought under its EOI instruments which is controlled by persons in Malaysia, even if it is located extra-territorially. 
Restrictions on access to bank information provided for by Malaysia’s domestic legislation is currently overridden in respect of only 18 of the 71 signed DTCs (10 of which are in force).  In respect of EOI requests made pursuant to its EOI agreements, Malaysia should ensure that its competent authority has access to bank information. 
Although the competent authority can exchange any information already in its possession, it does not currently have powers to access information in the Labuan IBFC in order to respond to an EOI request made pursuant to a TIEA.  Before entering into any TIEAs, Malaysia should ensure that its competent authority has the power to obtain and provide information that is the subject of a request under a TIEA from any person within its territorial jurisdiction who is in possession or control of such information, including from financial institutions. 
The rights and safeguards (e.g. notification, appeal rights) that apply to persons in the requested jurisdiction should be compatible with effective exchange of information. (ToR B.2)
Determination Factors Recommendations
The element is in place.      
Exchange of information mechanisms should provide for effective exchange of information. (ToR C.1)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   As a result of limitations with respect to access to information, in particular bank information, only 18 of Malaysia’s 71 signed agreements provide for effective exchange of information to the standard. Of these 18 agreements, 10 are in force.  Malaysia should ensure that all its agreements provide for exchange of information to the standard. 
The jurisdictions' network of information exchange mechanisms should cover all relevant partners. (ToR C.2)
Determination Factors Recommendations
The element is in place, but certain aspects of the legal implementation of the element need improvement.   Malaysia can exchange information in accordance with the standard with 10 EOI partners and has ratified an additional 5 DTCs/protocols to the standard.  Malaysia should update and develop its EOI network to ensure it has agreements (regardless of their form) for exchange of information with all relevant partners. 
The jurisdictions' mechanisms for exchange of information should have adequate provisions to ensure the confidentiality of information received. (ToR C.3)
Determination Factors Recommendations
The element is in place.      
The exchange of information mechanisms should respect the rights and safeguards of taxpayers and third parties. (ToR C.4)
Determination Factors Recommendations
The element is in place.   Two of Malaysia’s treaties do not ensure the parties concerned will not be required to supply information that would involve disclosure of professional secrets.  Malaysia should bring these agreements up to the standard. 
The jurisdiction should provide information under its network of agreements in a timely manner. (ToR C.5)
Determination Factors Recommendations
The assessment team is not in a position to evaluate whether this element is in place, as it involves issues of practice that are dealt with in the Phase 2 review.