KUALA LUMPUR (Oct 18): The Ministry of Finance (MOF) has set up a task force to develop a new tax incentive framework, which it said will be aligned with global minimum tax (GMT) and international tax policies.

The task force will consist of representatives from the Ministry of Investment, Trade and Industry (Miti), the Inland Revenue Board of Malaysia (LHDN), the Malaysian Investment Development Authority (Mida), and other relevant ministries and agencies, according to MOF in the Fiscal Outlook and Federal Government Revenue Estimates Report.

The Chartered Tax Institute of Malaysia has also been invited as a member of the task force, representing the relevant industry and tax practitioners.

This initiative will also reduce any potential negative impact on investment flows as the government moves towards this outcome-based approach, noted MOF.

“Continuous collaboration with investment promotion agencies and ministries is also crucial to maintaining investor confidence and economic stability,” it said.

Malaysia, the report said, will continue participating in international tax initiatives, including the OECD/G20 Inclusive Framework on base erosion and profit shifting.

This "potentially enhances Malaysia's role to be among the main contributors in the formulation of international tax regulations, thereby safeguarding national interests", it said.

The global minimum tax on multinational enterprises is among upcoming tax roll-out in the country, effective beginning or after Jan 1, 2025.

"Tax administration should also provide greater certainty and predictability in tax legislation and system", with tax incentives based on predetermined objectives, as well as clear and transparent criteria, the report said.

Administrative procedures must be streamlined, it said, by reviewing and strengthening tax governance "to ensure effectiveness in attracting investment relative to the implied revenue forgone".

"This is to ensure that GMT can be implemented effectively and that investment attractiveness, especially to multinational enterprises, can be maintained or refined," it added.

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