Details on the Country-by-Country Reporting (CbCR) are as follows:

What is CbCR?

The aggregate tax jurisdictional information relates to the global distribution of income, taxes paid, and other pertinent indicators regarding the location of economic activity across the various tax jurisdictions in which the multinational enterprise (MNE) group operates. The report also encompasses a comprehensive list of all constituent entities (CEs) for which financial information is reported, including details on the tax jurisdictions of incorporation for these entities, particularly if they differ from their tax jurisdictions of residence. Additionally, it provides information on the principal business activities conducted by each entity, organised into 13 distinct business categories.

CbCR comprises three (3) tables:

1. Table 1 – Overview of allocation of income, taxes and business activities by tax jurisdiction;
   
   
2. Table 2 – List of all CEs of the MNE group included in each aggregation per tax jurisdiction; and
   
   
3. Table 3 – Additional information or explanation that is considered necessary or that would facilitate the understanding of the compulsory information provided in the CbCR.

To complete the CbCR tables, please refer to the following instructions:

1. General Instruction
2. Specific Instruction

Domestic Legislation that regulates CbCR obligations

1. Income Tax (Multilateral Competent Authority Agreement on the Exchange of Country-by-Country Reports) Order 2016 [P.U.(A) 358/2016]
2. Income Tax (Country-by-Country Reporting) Rules 2016 [P.U.(A) 357/2016]
3. Income Tax (Country-by-Country Reporting) (Amendment) Rules 2017 [P.U.(A) 416/2017]
4. Labuan Business Activity Tax (Country-by-Country Reporting) Regulations 2017 [P.U.(A) 409/2017]

Implementation of CbCR

For Financial Year (FY) begins on and after 1 January 2017

Definition

Multinational Enterprise (MNE)

A collection of enterprises related through ownership or control which includes:

• Two or more enterprises residence in different tax jurisdictions;
  
  
• An enterprise that is resident in Malaysia or is Labuan entity carrying on a Labuan business activity and subject to tax with respect to the business carried out through a permanent establishment (PE) in another jurisdiction; or
  
  
• An enterprise is resident in another jurisdiction and is subject to tax with respect to the business carried out through a PE in Malaysia or Labuan.

Constituent Entities (CEs)

Any separate business unit of an MNE group that is included in the group’s consolidated financial statements or would be included if the equity interests of that business unit were traded on a public securities exchange.

Reporting Entity (RE)

The ultimate holding entity (UHE) or in certain conditions, the surrogate holding entity (SHE).

Ultimate Holding Entity (UHE)

A CE of the MNE group that owns directly or indirectly sufficient interest in one or more other CEs in the group.

Surrogate Holding Entity (SHE)

A CE that is resident in Malaysia and been appointed by the MNE group as a sole substitute for the UHE to file CbCR.

Financial Year (FY)

Annual accounting period of the UHE.

Reporting FY

The FY the financial and operational results reflected in the CbCR.

Who is subject to CbCR in Malaysia?

MNEs that meet the following criteria:

1. Having total consolidated group revenue in the FY preceding the reporting FY of at least RM3 billion; and
   
   
2. Any of its CEs is:
   1. A UHE incorporated/ registered/ established or deemed to incorporated/ registered/ established, under the Companies Act (CA) 2016, or under any written law, and resident in Malaysia;
      
      
   2. Incorporated/ registered/ established or deemed to incorporated/ registered/ established, under the Companies Act (CA) 2016, or under any written law, and resident in Malaysia;
      
      
   3. A surrogate entity incorporated/ registered/ established or deemed to incorporated/ registered/ established, under the Companies Act (CA) 2016, or under any written law, and resident in Malaysia; or
      
      
   4. A PE in Malaysia.
      
      
3. The UHE or CEs is a Labuan entity carrying on a Labuan business activity under the Labuan Regime.

Who is required to prepare and file the CbCR in Malaysia?

The Reporting entity i.e. the UHE or in certain conditions, the SHE.

CbCR format

The CbCR information should be prepared in accordance with the OECD’s CbCR Extensible Markup Language (XML) Schema which as follows:

• Country-by-Country Reporting XML Schema and User Guide [published June 2019]
  
  
• Country-by-Country Reporting Status Message XML Schema and User Guide [published June 2019]

CbCR submission

Through the HiDEF platform with IRBM public key.

Please check the following link for further details:

• HiDEF Test Portal
• HiDEF Prod Portal
• IRBM Public Key
• User manual for registration and submission
• Data preparation guide [updated July 2019]
• Sample data encryption tool [version 3.2]

CbCR filing deadline

Not later than 12 months after the last day of the Reporting FY.

Please refer to Rule 7 of the P.U.(A) 357/2016 or Regulation 7 of the P.U.(A) 409/2017.

Who is required to give notification of RE or Non-RE to the DGIR?

Any CEs of an MNE group resident in Malaysia who:

1. is the RE – need to identify whether it is UHE or SHE.
   
   
2. is the non-RE – need to provide the information of the RE including the FY and tax residence.

CbCR notification deadline

On or before the last day of the reporting FY

Please refer to Rule 6 of the P.U.(A) 357/2016 or Regulation 6 of the P.U.(A) 409/2017.

Notification medium

1. Commencing from YA 2021, the notification can be made through the form e-C and LE1 for Labuan entity; or
   
   
2. An official letter using the company’s official letterhead and signatories of the letter should be in accordance with Section 75 of the Income Tax Act 1967 (ITA) or Section 16 of Labuan Business Activity Tax Act 1990 (LBATA).

Note:

The notification letter must strictly follow the template provided on the Inland Revenue Board of Malaysia (IRBM) official website and must be delivered either by hand or by courier to the IRBM on or before the last day of the reporting FY.

Template of Notification Letter

• Notification as Reporting Entity
• Notification as Non-Reporting Entity

Other relevant references

• Malaysia CbCR Guidelines 2019
• OECD Guidance on the Implementation of CbCR - updated May 2024

Frequently Asked Questions (FAQ)

• FAQ as of January 2019

Failure to comply with CbCR requirements stipulated in the ITA/ LBATA

The taxpayer has committed an offence under:

Section 112A (ITA)

Upon conviction, be liable to a fine of not less than RM20,000 and not more than RM100,000, to imprisonment for a term not exceeding 6 months or to both, for each reporting FY.

Section 113A (ITA)

If prosecution is instituted, upon conviction, be liable to a fine of not less than RM20,000 and not more than RM100,000, to imprisonment for a term not exceeding 6 months or to both, for each reporting FY.

If no prosecution is instituted, DGIR may impose a penalty of not less than RM20,000.00 and not more than RM100,000.00 for each reporting FY.

Subregulation 6(3) of the P.U.(A) 409/2017 [only applies to Labuan entity]

Upon conviction, be liable to a fine not exceeding RM1,000,000, to imprisonment for a term not exceeding 2 years or to both, for each reporting FY.

Subregulation 9(1) of the P.U.(A) 409/2017 [only applies to Labuan entity]

Upon conviction, be liable to a fine not exceeding RM1,000,000, to imprisonment for a term not exceeding 2 years or to both, for each reporting FY.