KUALA LUMPUR: Malaysian Inland Revenue Board published an updated and amended MAP Guidelines dated 19 December 2017. The updated version replaces the previous version issued by the IRB dated 5 December 2014. The double tax agreements entered into by Malaysia with other Contracting States contain provisions which allow a taxpayer to present an MAP case to its relevant competent authority (CA) if the taxpayer considers that the actions of one or both of the Contracting States results in taxation which is not in agreement with the DTA. The MAP Guidelines are intended to provide guidance to taxpayers on the process and procedures to initiate an MAP request with the Malaysian CA to resolve treaty-related disputes. The amendments in the updated MAP Guidelines are for the purposes of incorporating the minimum standards set out in the OECD BEPS Action 14 final report. As a member of the BEPS Inclusive Framework, Malaysia has committed to the implementation of the minimum standards set out under the Final Report. This Client Alert highlights the key changes in the recently updated MAP Guidelines. The MAP Guidelines clarify that a taxpayer may present a case to the CA for treaty-related disputes, irrespective of the other legal remedies that may be available under domestic law.
The IRB clarifies that the Malaysian CA will first attempt to resolve any MAP requests locally by way of a unilateral agreement with the taxpayer, if appropriate. However, if the matter cannot be resolved by the Malaysian CA, it will then commence discussions with the CA of the other jurisdiction.
The minimum standards under the Final Report are aimed at ensuring the timely, effective and efficient resolution of treaty-related disputes. If the Malaysian CA has reached an agreement with the other CA in relation to the tax position of the taxpayer, the Malaysian CA will proceed to notify the taxpayer of the agreement. The taxpayer is required to confirm its acceptance of the MAP agreement within 30 days of the notification. Once an MAP agreement has been accepted by the taxpayer, the implementation of the agreement will be made within 3 months from the determination of the case.
One of the recommendations in the Final Report was for countries to commit to a timely resolution of MAP cases, and in particular, to endeavor to resolve MAP cases within a time frame of 24 months.
