The financial services firm said with all the developments happening globally, “it is quite clear that most countries, including Malaysia, will be implementing it”.
It cited among the global events the release of the Organisation for Economic Co-operation and Development’s agreed administrative guidance and implementation package.
Its director of international tax Kelvin Yee said the GMT does not depend on the government of the day.
“GMT was mentioned in the Budget 2023 speech on Oct 7, 2022 and is expected to be implemented in 2024,” he noted.
“We expect this to be reaffirmed on Feb 24. Unlike the goods and services tax (GST), the capital gains tax, and the inheritance tax which are options available to the Malaysian government, the GMT is not.
“If Malaysia does not do it, the taxing right will be ceded to other countries which implement it,” he said in a statement.
In a nutshell, he said the “GMT at 15% is the new ‘low’ for effective tax rate (ETR) for large multinational corporations (MNCs)”.
“An MNC can operate in a low-tax, high-tax, zero-tax country or in a country that offers generous tax incentives – however, the universal GMT rules would kick in to ensure 15% tax is paid somewhere in the world.
“MNCs operating in at least two jurisdictions, with a minimum annual consolidated group revenue of 750 million euros in at least two of the four immediately preceding fiscal years would be in-scope.
“Hence, certain large groups, especially Malaysian listed groups and inbound investments of large foreign-based MNCs would be affected,” he explained.
He also highlighted that the effective tax rate for GMT is a special one and is different from the normal accounting ETR.
He advised that affected groups undertake impact assessment and evaluate their data readiness in early 2023 and that “they should not be distracted by the fact that Malaysia has not legislated the rules”.
Yee also highlighted the GMT would have a deep impact on mergers and acquisitions.
“For example, a group that is already under the scope of GMT acquires another smaller target. The future profit projections will need to take into account the additional top-up taxes that may arise,” he said.