Article
The Tax Guidelines on place of business – Understanding the rule and its practical application
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Further to the introduction of subsections 12(3) and 12(4) of the Malaysian Income Tax Act 1967 (the Act) effective 28 December 2018, the Inland Revenue Board of Malaysia has released guidelines to provide clarification on the application of subsections 12(3) and 12(4) of the Act in determining the “place of business” of a person in Malaysia.
It is delightful to note that the guidelines have adopted several key concepts of OECD and United Nations e.g. geographical and commercial coherence, “at the disposal” test, the PE exception rules (preparatory or auxiliary), delivery and order-filing activities that are tied to sales-related activities, anti-fragmentation rules, and the concept of independent agent. The reference to the OECD model is vital as there are various literatures for one to make reference to and hence, reducing the risk of misinterpretation and misapplication.
With the latest development, MNCs from the US and other non-treaty countries should revisit their existing and proposed modus operandi in Malaysia with a view to assessing the implications and the way forward.
Thank you for joining us! We hope you found it useful. If you require more information, please reach out to your usual Deloitte Partner or any of our speakers listed below.
Tan Hooi Beng
International Tax Leader
Deloitte Malaysia
hooitan@deloitte.com
Kelvin Yee
Associate Director
International Tax
Deloitte Malaysia
keyee@deloitte.com
Tan Chia Woon
Associate Director
International Tax
Deloitte Malaysia
chiatan@deloitte.com
Invited Guests
Shaharrudy Othman
Director of Department of International Taxation
Malaysian Inland Revenue Board
Nooriah Mohd Mainuri
Director of International Regulation and Taxation Agreements Division
Malaysian Inland Revenue Board
