This is a shocking news to me, as Malaysia, together with 3 other nations i.e. Philippines, Uruguay and Costa Rica, were blacklisted as uncooperative tax havens by the Organization for Economic Cooperation and Development (OECD) at the request of the Group of 20 (G20) summit.
In my perception, Malaysia is very far from being a tax haven to its residents. People always say that if you buy a big car, or a high-end property, you will always be on the eyes of Inland Revenue Board (IRB, a.k.a. Lembaga Hasil Dalam Negeri, LHDN). Same will go to those who never declare for income tax, or declared very little, and buy something valuable within the nation.
After some Google findings, it seems that the cause for this blacklist is by the Labuan offshore financial centre, which is viewed as the tax haven for foreigners. Although it is "offshore", now this small little island has caused a major impact to the whole Malaysia by this OECD's no-play-play blacklist action.
Surprisingly, some well-known tax havens such as Switzerland, Singapore, Cayman Islands, Liechtenstein, Monaco are just in the "grey list", together with Luxembourg, Austria, Belgium and Chile, just because they have agreed to "improve transparency standards".
China (including Hong Kong and Macao) is even in the "white list", due to their "commitment" to implement the internationally agreed tax standards.
So, it is now clear that the blacklisting is not based on how far the nations has gone in harboring foreign tax avoiders, but how cooperative to G20 are they in implementing the demanded tax standards.
This must be the most unwanted "greeting" to Najib who just sworn in as the new prime minister of Malaysia today. How will he resolve this issue?
For your information, the G20 is made up of the finance ministers and central bank governors of 19 countries: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom and the United States of America, and also the European Union who is represented by the rotating Council presidency and the European Central Bank.
The Managing Director of the International Monetary Fund (IMF) and the President of the World Bank, plus the chairs of the International Monetary and Financial Committee and Development Committee of the IMF and World Bank, also participate in G20 meetings on an ex-officio basis.
Malaysia and 3 other countries, which had been blacklisted by the Organisation for Economic Cooperation and Development (OECD), are now off the list after they agreed to adopt the OECD’s regulations.
ReplyDeleteThese 4 countries are now in the category of jurisdictions that have committed to the internationally agreed tax standard but which have yet to substantially implement it.