It said the government and OECD have agreed to implement a two-pillar approach which is expected to be implemented starting next year.

Pillar One highlights the allocation of taxing rights and seeks to review profit allocations, while Pillar Two introduces a minimum effective tax rate at the global level of 15%.

The global tax rate will help to ensure a level playing field between countries in attracting foreign investment, and prevent harmful tax planning that can lead to tax base leakage and profit transfer to countries with low tax rates.

The government is reviewing technical details of the pillars, including the possibility of introducing qualified domestic minimum top-up tax, the ministry said.

In its 2023 pre-budget statement, the ministry said direct tax collection at the end of April stood at RM45.6 billion or 35.8% of the target, while indirect tax collection was at RM17.3 billion or 39.4% of the target.

“Revenue collection up to April 2022 was higher than expected, and subsequent collection is expected to be better than the 2022 budget’s estimates, in line with the improving economic recovery and increasing business and leisure activities,” the ministry said.

It said the government intends to implement e-invoicing in stages to enhance the efficiency of the country’s tax administration management.

E-invoicing will improve the quality of services, reduce compliance costs to taxpayers as well as increase the efficiency of business operations.

It will also streamline and strengthen the national tax system, increase tax transparency and provide a more accurate assessment of compliance risk.