How Malaysia’s New 2025 Global Tax Rules Will Impact Your Business

Starting in 2025, Malaysia will introduce new global tax rules that could significantly affect how multinational businesses operate and pay taxes.

As part of a worldwide initiative led by the OECD, the Global Minimum Tax (GMT) aims to ensure that large companies pay at least 15% in corporate tax, no matter where they do business.

If your company is part of a multinational group, these changes could have a direct impact on your structure, reporting, and bottom line.

What Is the Global Minimum Tax (GMT)?

The Global Minimum Tax (GMT) is part of an international push, led by the OECD to make sure large multinational companies pay at least 15% in corporate taxes, no matter where they do business.

This tax applies to multinational groups earning EUR 750 million or more in annual global revenue.

The goal? To stop companies from shifting profits to tax havens just to pay less tax.

Malaysia is set to roll out its version of GMT on 1 January 2025, aligning with these global standards.

Why Is Malaysia Introducing This?

Malaysia is joining over 140 countries in implementing the GMT as part of the OECD’s Base Erosion and Profit Shifting (BEPS) initiative.

This move is meant to:

Level the playing field for businesses
Protect Malaysia’s tax base
Maintain trust with international investors

By adopting GMT, Malaysia is showing that it's serious about fair taxation, but it’s also trying to stay competitive by tweaking incentives and easing the transition for affected companies.

How the Global Minimum Tax Will Work in Malaysia

Malaysia’s Finance (No. 2) Act 2023 lays out how the GMT will be applied. Two main mechanisms will be introduced:

1. Domestic Top-up Tax (DTT)

This ensures that local subsidiaries of multinational groups pay at least 15% in corporate taxes in Malaysia.

2. Multinational Top-up Tax (MTT)

This rule kicks in when a multinational’s overall effective tax rate (ETR) across jurisdictions falls below 15%.

Malaysia will then collect the difference as a top-up tax.

Both these rules are designed to ensure that profits earned in Malaysia or by Malaysian operations are taxed fairly and transparently.

What Does This Mean for Malaysian Businesses?

If you're running a Malaysian subsidiary of a large multinational group, this tax reform could have a direct impact.

Here’s what you need to consider:

Review Your Tax Structure

Companies may need to rethink their tax planning strategies. Tax incentives that previously helped reduce your effective tax rate may no longer give the same benefits.

More Reporting Requirements

Be ready for more detailed tax reporting. You'll need to show clearly how much tax you pay across different countries and justify it.

Operational and Financial Changes

Some companies might need to adjust how they operate, especially if their business model relies heavily on tax incentives or low-tax jurisdictions.

How Other ASEAN Countries Are Responding

Malaysia isn’t alone. Other Southeast Asian countries are also preparing for the GMT:

Singapore

Introducing a similar top-up tax and reporting structure in 2025

Indonesia

Launching a new digital tax system to support GMT compliance

Thailand

Adjusting tax and social security rules to align with global standards

Vietnam

Introducing its own Domestic Top-up Tax to protect its tax base

Malaysia’s approach is seen as balanced, aiming to meet global expectations while still keeping the country attractive for investment.

What Should You Do Next?

To stay ahead of these changes, here are four steps you should take:

Check if You’re Affected

If your group’s annual global revenue exceeds EUR 750 million, you’ll likely fall under the new rules.

Assess the Financial Impact

Work with your finance team to see how the top-up taxes could affect your bottom line.

Talk to a Tax Advisor

A professional can help you navigate the new rules, restructure if needed, and stay compliant.

Get Your Reporting Ready

Start preparing your systems for more rigorous tax documentation and audits.

Malaysia’s adoption of the Global Minimum Tax is a big shift for multinational businesses operating here.

But with the right planning, you can stay compliant and competitive.

Now’s the time to review your tax strategy, update your reporting systems, and get expert advice before the 2025 deadline hits.

Source: aseanbriefing

The 2025 Global Tax Changes are Coming, Is Your Business Ready?

With new tax rules shaking up how multinationals operate, having the right team in place is more important than ever.

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