Rules for the exchange of information

Rules for the exchange of information

The Income Tax (Exchange of Information) Rules 2021 [P.U.(A) 436] were gazetted on 1 December 2021. The Rules provide that the competent authority of a jurisdiction that has entered into an arrangement with the Government of Malaysia may request information on any person, from the Director General (DG).

The request for information made to the DG shall state the following:

(a)   The identity of the person under examination or investigation

(b)  The period for which the information is requested

(c)   A statement of the information sought including the details and form

(d)  The tax purpose for which the information is requested

(e)   The grounds for believing that the information requested is found in Malaysia or is in the possession or control of a person in Malaysia

(f)    To the extent known, the name and address of any person believed to be in possession of the requested information

(g)  A statement that the request is in conformity with the law and administrative practices of the territory of the competent authority and would have been obtainable, had the requested information been available in that jurisdiction

(h)  A statement that the competent authority has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties

Upon receiving the request, the DG may by notice under Section 81 of the Income Tax Act 1967 (ITA) require the person referred to in the request to provide the information as requested by the competent authority within the time specified in the notice. Any person who fails to comply with such notice will be deemed to have committed an offence under Section 120 of the ITA.

Should the DG fail to obtain information from the person concerned, the DG may by notice under Section 81 require a bank to provide the information as requested by the competent authority. The DG may also request the information of a person directly from a bank, without first making a request from that person. Any bank which fails to comply with such notice will also be deemed to have committed an offence under Section 120 of the ITA.

The following terms have been defined in the Rules:

(i)    Bank

         (a)   A bank, finance company, or a banking and finance company licensed or deemed to be licensed under the Financial Services Act 2013 (FSA)

         (b)  An Islamic bank licensed or deemed to be licensed under the Islamic FSA

         (c)   A prescribed institution under the Development Financial Institutions Act 2002

         (d)  A Labuan company or bank licensed under the Labuan Financial Services and Securities Act 2010 (FSSA)

         (e)   A Labuan company or bank licensed under the Labuan Islamic FSSA

(ii) Information

      Information required to be disclosed pursuant to the provision on exchange of information in an  arrangement

(iii) Arrangement

      (a) The Convention on Mutual Administrative Assistance in Tax Matters

      (b)  Any arrangements with participating jurisdictions to improve international tax compliance through –

            i)       Any bilateral or multilateral tax convention

            ii)      Any bilateral or multilateral competent authority agreements, or

            iii)     Any tax information exchange agreement

(iv) Competent authority

       Duty authorized servant or agent of a government of any territory outside Malaysia with which the Government of Malaysia has entered into an arrangement

With this, the Income Tax (Exchange of Information) Rules 2011 have been revoked.