Common Reporting Standard (CRS) for the Automatic Exchange of Financial Account Information
New!
Background
The CRS was developed by the Organisation for Economic Cooperation and Development (OECD) to put a global model of automatic exchange of information into practice for the purpose of tax compliance. It sets out the financial account information to be exchanged, the financial institutions required to report, the different types of accounts and taxpayers covered, as well as common due diligence procedures to be followed by financial institutions.
Under the CRS, Malaysian Financial Institutions (MYFIs) are required to collect and report to Inland Revenue Board of Malaysia (IRBM), financial account information on non-residents. IRBM will exchange this information with the participating foreign tax authorities of those non-residents.
More than 100 jurisdictions have committed to exchange the CRS information. Malaysia has committed to exchange the CRS information from 2018 and would also be receiving financial account information on Malaysian residents from other countries' tax authorities. This will help ensure that residents with financial accounts in other countries are complying with their domestic tax laws and act as a deterrent to tax evasion.
Legislation
CRS obligations are imposed on MYFIs through the operation of the Income Tax (Automatic Exchange of Financial Account Information) Rules 2016 (CRS Rules), Income Tax (Automatic Exchange of Financial Account Information) (Amendment) Rules 2017 (CRS (Amendment) Rules 2017) and Labuan Business Activity (Automatic Exchange of Financial Account Information) Regulations 2018 (CRS Regulations). The implementation timelines are as follow:
Pre-existing Accounts cut-off date
New Account
Determination date whether Pre-existing Individual Account meet the high value threshold (exceeds USD1,000,000)
Determination date whether Pre-existing Entity Account meet the threshold for review (exceeds USD250,000)
Review of Pre-existing High Value Individual Account must be completed by
Review of Pre-existing Lower Value Individual Account must be completed by
Review of Pre-existing Entity Accounts must be completed by
31 July 2018* 31 July 2019*
30 June 2018 and 30 June of subsequent years
*Reporting for 2018 and 2019 for all accounts extended to 31 July to be in line with the special provision for Pre-existing Individual Accounts reporting requirement
Special provision for Pre-existing Individual Account
Reportable Jurisdictions
MYFIs are required to collect financial account information from all non-residents and report to IRBM those information relating to the Reportable Jurisdictions according to the timeline as stated above.
To ensure that MYFIs are ready to submit the information relating to the reportable jurisdictions within the timeline, MYFIs are advised to prepare the report of all participating jurisdictions and not only the reportable jurisdictions.
The list of Reportable Jurisdictions for 2021 CRS Exchange as at 15 January 2021 has been made final and available here.
List of Participating Jurisdictions
Under the CRS, a professionally managed Investment Entity that is not a Participating Jurisdiction Financial Institution will always be treated as a Passive Non-Financial Entity (Passive NFE). MYFIs must "look-through" the entity to identify its controlling persons and report each reportable controlling person.
For the purpose of this "look-through", " and also for the preparation of CRS reports by MYFIs, Malaysia has updated its List of Participating Jurisdictions as at 02 January 2018. This list will be updated from time to time where necessary.
Reporting
Reporting of CRS Information will be in the OECD's CRS Extensible Markup Language (XML) Schema and reported to IRBM through the IRBM's IT platform.
In order to ensure that a message and a record can be identified and corrected, the MessageRefID and DocRefID must be unique in space and time. For the purpose of domestic CRS reporting, these elements has to be structured in the following format:
A. DocRefID Naming Convention
B. MessageRefID Naming Convention
Tax residency A "self-certification" is a certification by the Account Holder that provides the Account Holder's status and any other information that may be reasonably requested by the MYFIs to fulfil its reporting and due diligence obligations, such as whether the Account Holder is resident for tax purposes in a Reportable Jurisdiction. The domestic laws of the various jurisdictions lay down the conditions under which an individual or an entity is to be treated as fiscally "resident". In order to help both account holders and financial institutions to comply with their obligations under the CRS, OECD has provided information on Tax Identification Numbers (TINs) and tax residency rules applicable in jurisdictions that are committed to automatically exchanging information.
Further information
Contact
If you have any further questions regarding CRS, please send your questions to:
crs@hasil.gov.my