Intergovernmental agreements (IGAs)
Malaysia and the United States had, on 30 June 2014, reached an agreement in substance on a Model 1 IGA to implement the Foreign Account Tax Compliance Act (FATCA). Although not signed, Malaysia has, however, been included in the US Treasury’s list of jurisdictions that are treated as having an IGA in effect with the United States.
Under the IGA, reporting Malaysia-based financial institutions will provide the Malaysian Inland Revenue Board with the required information of accounts of US persons. The information of which will then be exchanged between the Malaysian and US tax authorities. The IGA is currently being finalised and will be signed on a date to be announced.
Common Reporting Standard (CRS)
Malaysia is committed to exchanging CRS information from 2018. Under the CRS, Malaysian financial institutions (MYFIs) are required to collect and report financial account information on non-residents.
The reporting financial Institution is defined to mean any financial institution (FI):
- that is resident in Malaysia (excluding branches located outside Malaysia), and
- any branch of an FI that is not resident in Malaysia if it is located in Malaysia.
Once an MYFI has applied the due diligence procedures in respect of the accounts it holds and has identified reportable accounts, it must report certain information regarding those accounts to the tax authorities. A reporting MYFI with no reportable accounts is required to make a nil return annually to the Malaysian Inland Revenue Board.