Malaysia is committed to internationally-agreed tax standards and should not be categorized with jurisdictions that have not, Prime Minister Datuk Seri Najib Tun Razak announced on April 2.
The Prime Minister explained that Malaysia has sent a statement to the Organization for Economic Cooperation and Development (OECD) leaders to reaffirm its commitment to subscribe to the OECD standard for the effective exchange of information (EOI).
Najib, who is also Finance Minister, was responding to reports that Malaysia and its offshore jurisdiction, Labuan International Business and Financial Centre (IBFC), has been categorized as “jurisdictions which have not committed to the internationally-agreed tax standards.”
“We should not be in that category as – in practice – we have been committed to OECD requirements. Our statement to OECD leaders earlier this week was to re-affirm this," he remarked, adding:
“I understand that the list is a progress report or status report of jurisdictions which have not committed to the internationally-agreed tax standards.”
Najib also clarified that Labuan has never been in any list of “tax havens” issued by OECD and Malaysia has always been cooperative with competent authorities:
“At all times, Labuan IBFC, LOFSA and Malaysian authorities have been co-operative with competent authorities from other countries on tax matters and financial crime, particularly money laundering."
“Our commitment is further evident from the on-going efforts to tighten provisions of EOI which are already in keeping with OECD requirements,” Najib continued, going on to state:
“Certainly, we expect the OECD to amend the list to put us in the category of jurisdictions that have committed to the internationally agreed tax standard."
In a statement, Labuan Offshore Financial Services Authority (LOFSA) welcomed the approach by the G20 and OECD to take measures to stamp out tax evasion. LOFSA said since its inception, the jurisdiction has met the highest international standards and has received positive assessments by the International Monetary Fund (IMF) under its Offshore Financial Sector Assessment Programme.
In addition, Labuan IBFC has been affirmed as a “low-risk” jurisdiction for money laundering by the Asia Pacific Group on Money Laundering which is a division of the Financial Action Task Force and an associate body of OECD.
LOFSA said existing EOI provisions have already met OECD requirements. Efforts are also taken to tighten them further through the legislative process. Malaysia, as the world’s 19th largest trading nation, has double-taxation agreements with 69 countries.
These agreements have specific terms on the EOI which were in fact drafted by OECD. These terms commit Malaysia to cooperate with regulators to eradicate tax evasion.
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