Country-by-Country Reporting in Malaysia - KPMG

1 5 October 2017 Country-by-Country Reporting in Malaysia The Income Tax ( Country-by-Country Reporting ) Rules 2016 (hereinafter referred to as CbCR Rules ) has been gazetted on 23 December 2016. The CbCR Rules which took effect from 1 January 2017 apply to Malaysian-parented multinational corporation ( MNC ) Groups with a total consolidated group revenue of at least Malaysian Ringgit ( RM ) 3 billion in the financial year ( FY ) preceding the Reporting FY. For purposes of compliance with the CbCR Rules, the MIRB has recently released the CbCR implementation guidance, instructions, CbCR templates and samples of notification letter for Reporting and non- Reporting entity. Notification on CbCR The CbCR Rules state that any constituent entity of a MNC Group that is resident in Malaysia shall notify the Director General in writing if it is the ultimate holding company or the surrogate holding company, on or before the last day of the Reporting FY.

2 Therefore, Malaysian-parented Groups whose ultimate holding companies are Malaysian residents would need to inform the Director General that it is the Reporting entity for its Group. Where a constituent entity of an MNC Group that is resident in Malaysia 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 which is part of the MNC 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. Bob Kee Executive Director Chang Mei Seen Executive Director Ivan Goh Executive Director The first FY due for notification would be Companies with financial year ending 31 December 2017, and the notification deadline would be on or before 31 December 2017.

3 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 EntityIf 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. Country-by-Country Report The information that needs to be reported must be based on the template (3 Tables) released by the MIRB as follows (please click on the respective title to download a copy): Table 1: Overview of allocation of income, taxes andbusiness activities by tax jurisdiction Table 2: List of all the constituent entities of the MNC Groupincluded in each aggregation per tax jurisdiction Table 3: Additional informationWhen preparing the Country-by-Country Report, taxpayer shall refer to the following instructions and implementation guidance as released by the MIRB (please click on the respective title to download a copy).

4 General instructions (concerning the definition of key termsused in the template) Specific instructions (for completion of Table 1 and Table 2and should be read together with the implementationguidance below) Guidance on the Implementation of country -by-CountryReporting (updated September 2017)Please be reminded that the Country-by-Country Report needs to be submitted to the Director General on or before 12 months from the last day of the Reporting FY. For instance, the due date for the first submissions of the Country-by-Country Report will be 31 December 2018 ( for MNC Groups with financial year ending 31 December 2017). If you require further 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. Bob Kee Executive Director Global Transfer Pricing Services Chang Mei Seen Executive Director Global Transfer Pricing Services Privacy | Legal 2017 KPMG Tax Services Sdn.

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