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Lampiran

PERINTAH CUKAI PENDAPATAN (PERJANJIAN MULTILATERAL PIHAK BERKUASA BERWIBAWA MENGENAI PERTUKARAN LAPORAN MENGIKUT NEGARA) 2016

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LAMPIRAN B:
SENARAI PIHAK BERKUASA BERWIBAWA
[untuk dilengkapkan]

LAMPIRAN C:
SOAL SELIDIK
[untuk dilengkapkan]

Dibuat 18 Disember 2016
[LHDN.01/10.5-1/68.3-45; Perb.0.6869/47(SJ.16)(SK1); PN(PU2)80/LXXXV]

DATUK JOHARI BIN ABDUL GHANI
Menteri Kewangan Kedua

[Akan dibentangkan di Dewan Rakyat menurut subseksyen 132B(2) Akta Cukai
Pendapatan 1967]

P.U. (A) 358 16

INCOME TAX ACT 1967

INCOME TAX (MULTILATERAL COMPETENT AUTHORITY AGREEMENT ON THE
EXCHANGE OF COUNTRY-BY-COUNTRY REPORTS) ORDER 2016

IN exercise of the powers conferred by section 132B of the
Income Tax Act 1967 [Act 53], the Minister makes the following order:

Citation 1.
 This order may be cited as the Income Tax (Multilateral Competent
Authority Agreement on the Exchange of Country-by-Country Reports)
Order 2016.

Country-by-country reporting 2.
It is declared that the arrangements specified in the Schedule have been made by the Government of Malaysia and the government which has signed the Multilateral
Competent Authority Agreement on the Exchange of Country-by-Country Reports with a view of exchanging information that is foreseeably relevant in relation to taxation and that it is expedient that those arrangements shall have effect.

SCHEDULE

MULTILATERAL COMPETENT AUTHORITY AGREEMENT ON THE EXCHANGE OF
COUNTRY-BY-COUNTRY REPORTS

Whereas, the jurisdictions of the signatories to the Multilateral Competent
Authority
Agreement on the
Exchange of
Country-by-Country
Reports
(the “Agreement”) are Parties of, or territories covered by, the Convention on Mutual
Administrative Assistance in Tax Matters or the Convention on Mutual Administrative
Assistance  in  Tax  Matters  as  amended  by  the  Protocol  (the  “Convention”)  or  have signed or expressed their intention to sign the Convention and acknowledge that the
Convention must be in force and in effect in relation to them before the automatic exchange of Country-by-Country (CbC) Reports takes place;

P.U. (A) 358 17

Whereas, a country that has signed or expressed its intention to sign the
Convention will only become a Jurisdiction as defined in Section 1 of this Agreement once it has become a Party to the Convention;

Whereas, the jurisdictions desire to increase international tax transparency and improve access of their respective tax authorities to information regarding the global allocation of the income, the taxes paid, and certain indicators of the location of economic  activity  among  tax  jurisdictions  in  which Multinational  Enterprise  (MNE)
Groups  operate  through  the  automatic  exchange  of  annual  CbC Reports, with a view to assessing high-level transfer pricing risks and other base erosion and profit shifting related risks, as well as for economic and statistical analysis, where appropriate;

Whereas,  the  laws  of  the  respective  Jurisdictions  require  or  are  expected  to require  the  Reporting Entity of an MNE Group to annually file a CbC Report;

Whereas, the CbC Report is intended to be part of a three-tiered structure, along with a global master file  and  a  local  file,  which  together  represent  a  standardised approach  to  transfer  pricing documentation  which  will  provide  tax  administrations with  relevant  and  reliable  information  to perform an efficient and robust transfer pricing risk assessment analysis;

Whereas,  Chapter III of the Convention authorises  the  exchange  of  information for  tax  purposes, including the exchange of information on an automatic basis, and allows the competent authorities of the Jurisdictions to agree on the scope and modalities of such automatic exchanges;

Whereas,  Article 6 of  the  Convention  provides  that  two  or  more  Parties  can mutually  agree  to exchange information automatically, albeit that the actual exchange of the information will take place on a bilateral basis between the Competent
Authorities;

Whereas, the Jurisdictions will have, or are expected to have in place by the time the first exchange of CbC Reports takes place, (i) appropriate safeguards to ensure that

P.U. (A) 358 18
the information received pursuant to this Agreement remains confidential and is used for  the  purposes  of  assessing  high-level  transfer pricing  risks  and  other  base erosion  and  profit  shifting  related  risks,  as well as for economic and statistical analysis,  where  appropriate,  in  accordance  with  Section  5  of  this  Agreement,  (ii)
the infrastructure  for  an  effective  exchange  relationship  (including  established processes  for  ensuring timely, accurate, and confidential information exchanges, effective and reliable communications, and capabilities  to  promptly  resolve  questions and  concerns  about exchanges  or  requests  for exchanges and to administer the provisions of Section 4 of this Agreement) and (iii) the necessary legislation to require
Reporting Entities to file the CbC Report;

Whereas the Jurisdictions are committed  to  discuss  with  the  aim  of  resolving cases  of  undesirable economic outcomes, including for individual businesses, in accordance with paragraph 2 of Article 24 of the Convention, as well as paragraph 1 of
Section 6 of this Agreement;

Whereas mutual agreement procedures, for instance on the basis of a double tax convention concluded between the jurisdictions of the Competent  Authorities,  remain applicable  in  cases  where  the  CbC Report has been exchanged on the basis of this
Agreement;

Whereas, the Competent Authorities of the jurisdictions intend to conclude this
Agreement, without prejudice to national  legislative  procedures  (if  any),  and  subject to  the  confidentiality  and  other protections  provided  for  in  the  Convention, including  the  provisions  limiting  the  use  of  the information exchanged thereunder;

Now, therefore, the Competent Authorities have agreed as follows:

P.U. (A) 358 19

SECTION 1
Definitions

1.   For the purposes of this Agreement, the following terms have the following meanings:

a)   the term  “Jurisdiction”  means a country or a territory in respect of which the
Convention is in force  and  is  in  effect,  either through  ratification,  acceptance or  approval  in  accordance  with Article 28, or through territorial extension in accordance with Article 29, and which is a signatory to this Agreement;
b)   the  term  “Competent  Authority”  means,  for  each  respective  Jurisdiction,  the persons  and authorities listed in Annex B of the Convention;
c)     the term  “Group”  means a collection of enterprises related through ownership or control  such that  it  is  either  required  to  prepare  consolidated  financial statements  for  financial  reporting purposes under applicable accounting principles or would be so required if equity interests in any of the enterprises were traded on a public securities exchange;
d) the term  “Multinational Enterprise (MNE) Group” means any Group that (i) includes two or more enterprises the tax residence for which is in different jurisdictions, or includes an enterprise that  is  resident  for  tax purposes  in  one  jurisdiction  and  is  subject  to  tax  with  respect  to  the business carried out through a permanent establishment in another jurisdiction, and (ii) is not an Excluded MNE Group;
e)   the term  “Excluded MNE Group”  means a Group that is not required to file a
CbC Report on the  basis  that  the  annual  consolidated  group  revenue  of  the
Group  during  the  fiscal  year immediately  preceding  the  reporting  fiscal year,  as  reflected  in  its  consolidated  financial statements for such preceding fiscal year, is below the threshold defined in domestic law by the Jurisdiction and being consistent with the 2015 Report, as may be amended following the 2020 review contemplated therein;
f)     the term  “Constituent Entity”  means (i) any separate business unit of an MNE
Group that is included in the consolidated financial statements for financial reporting purposes, or would be so included  if  equity  interests  in  such

P.U. (A) 358 20
business  unit  of  an  MNE  Group  were  traded  on  a  public securities exchange  (ii)  any  separate  business  unit  that  is  excluded  from  the  MNE
Group’s consolidated financial statements solely on size or materiality grounds and (iii) any permanent establishment  of  any  separate  business  unit  of  the
MNE  Group  included  in  (i)  or  (ii)  above provided  the  business  unit prepares  a  separate  financial  statement  for  such  permanent establishment for  financial  reporting,  regulatory,  tax  reporting  or  internal  management control purposes;
g)   the term  “Reporting Entity”  means the Constituent Entity that, by virtue of domestic law in its jurisdiction of tax residence, files the CbC Report in its capacity to do so on behalf of the MNE Group;
h)   the  term  “CbC  Report”  means  the  country-by-country  report  to  be  filed annually  by  the Reporting  Entity  in  accordance  with  the  laws  of  its jurisdiction  of  tax  residence  and  with  the information required to be reported under such laws covering the items and reflecting the format set out in the 2015 Report, as may be amended following the 2020 review contemplated therein;
i)   the term “2015 Report” means the consolidated report, entitled “Transfer
Pricing Documentation and Country-by-Country Reporting, on Action 13 of the
OECD/G20 Action Plan on Base Erosion and Profit Shifting”;
j)     the term “Co-ordinating Body” means the co-ordinating body of the Convention that, pursuant to paragraph  3  of  Article  24  of  the  Convention,  is  composed of  representatives  of  the  competent authorities of the Parties to the
Convention;
k)   the term  “Co-ordinating Body Secretariat”  means the OECD Secretariat that provides support to the Co-ordinating Body;
l)   the term  “Agreement in effect”  means, in respect of any two Competent
Authorities, that both Competent Authorities have indicated their intention to automatically exchange information with each other and have satisfied the other conditions set out  in paragraph 2 of Section 8. A list of Competent
Authorities between which this Agreement is in effect is to be published on the
OECD Website.

P.U. (A) 358 21

2.
As regards to the application of this Agreement at any time by a Competent
Authority of a Jurisdiction,  any  term  not  otherwise  defined  in  this  Agreement  will, unless the  context  otherwise requires or the Competent Authorities agree to a common meaning (as permitted by domestic law), have the meaning that it has at that time under the law of the Jurisdiction applying this Agreement, any meaning under the applicable tax laws of that Jurisdiction prevailing over a meaning given to the term under other laws of that Jurisdiction.

SECTION 2
Exchange of Information with Respect to MNE Groups

1.
Pursuant  to  the  provisions  of  Articles  6,  21  and  22  of  the  Convention,  each
Competent Authority will annually exchange on an automatic basis the CbC Report received from each Reporting Entity that is resident for tax purposes in its jurisdiction with all such other Competent Authorities of Jurisdictions with respect to which it has this Agreement in effect, and in which, on the basis of the information in the CbC Report, one or more Constituent Entities of the MNE Group of the Reporting Entity are either resident for tax purposes, or are subject to tax with respect to the business carried out through a permanent establishment.

2.
Notwithstanding the previous paragraph, the Competent Authorities of the
Jurisdictions that have indicated that they are to be listed as non-reciprocal jurisdictions on the basis of their notification pursuant to paragraph 1 b) of Section 8 will send CbC
Reports pursuant to paragraph 1, but will not receive CbC Reports under this
Agreement. Competent Authorities  of Jurisdictions that are not listed as non-reciprocal
Jurisdictions will both send and receive the information specified in paragraph 1.
Competent Authorities will,  however,  not  send  such  information  to  Competent
Authorities  of  the Jurisdictions included in the aforementioned list of non-reciprocal
Jurisdictions.

P.U. (A) 358 22

SECTION 3
Time and Manner of Exchange of Information

1.
For the purposes of the exchange of information in Section 2, the currency of the amounts contained in the CbC Report will be specified.

2.
With respect to paragraph 1 of Section 2, a CbC Report is first to be exchanged, with respect to the fiscal year of the MNE Group commencing on or after  the date indicated by the Competent Authority in the notification pursuant to paragraph 1a) of
Section 8, as soon as possible and no later than 18 months after the last day of that fiscal year. Notwithstanding the foregoing, a CbC Report is only required to be exchanged, if both Competent Authorities have this Agreement in effect and their respective
Jurisdictions have in effect legislation that requires the filing of CbC Reports with respect to the fiscal year to which the CbC Report relates and that is consistent with the scope of exchange provided for in Section 2.

3.
Subject to paragraph 2, the CbC Report is to be exchanged as soon as possible and no later than 15  months  after  the  last  day  of  the  fiscal  year  of  the  MNE  Group to  which  the  CbC  Report relates.

4.
The Competent Authorities will automatically  exchange  the  CbC  Reports through  a common schema in Extensible Markup Language.

5.
The Competent Authorities will  work  towards  and  agree  on  one  or  more methods  for electronic  data  transmission,  including  encryption  standards,  with  a view  to  maximising standardisation  and  minimising  complexities  and  costs  and  will notify  the  Co-ordinating  Body Secretariat of such standardised transmission and encryption methods.

P.U. (A) 358 23

SECTION 4
Collaboration on Compliance and Enforcement

A Competent  Authority  will  notify  the  other  Competent  Authority  when  the first-mentioned Competent Authority has reason to believe, with respect to a Reporting
Entity that is resident for tax purposes in the jurisdiction of the other Competent
Authority, that an error may have led to incorrect or incomplete information reporting or that there is non-compliance of a Reporting Entity with respect to  its  obligation  to file  a  CbC  Report.  The notified  Competent  Authority  will  take  appropriate measures available under its domestic law to address the errors or non-compliance described in the notice.
SECTION 5
Confidentiality, Data Safeguards and Appropriate Use

1.
All  information  exchanged  is  subject  to  the  confidentiality  rules  and  other safeguards provided  for  in  the  Convention,  including  the  provisions  limiting  the use  of  the  information exchanged.

2.
In  addition  to  the  restrictions  in  paragraph  1,  the  use  of  the  information will  be  further limited  to  the  permissible  uses  described  in  this  paragraph.  In particular,  information  received  by means of the CbC Report will be used for assessing high-level transfer pricing, base erosion and profit shifting related risks, and, where appropriate, for economic and statistical analysis. The information will not be used as a substitute for a detailed transfer pricing analysis of individual transactions and prices based on a full functional analysis and a full comparability analysis.  It is  acknowledged that information in the CbC Report on its own does not constitute conclusive evidence that transfer prices are  or  are  not  appropriate and,  consequently,  transfer  pricing adjustments  will not  be  based  on the CbC  Report.  Inappropriate  adjustments  in contravention  of  this  paragraph  made  by  local  tax administrations will be conceded in any competent authority proceedings. Notwithstanding the above, there is no prohibition on using the CbC Report data as a basis for making further enquiries into the
MNE Group’s transfer pricing arrangements or into other tax matters in the course of a

P.U. (A) 358 24
tax audit and, as a result, appropriate adjustments to the taxable income of a
Constituent Entity may be made.

3.
To the  extent  permitted  under  applicable  law,  a  Competent  Authority  will notify  the  Co-ordinating Body Secretariat immediately of any cases of non-compliance with paragraphs 1 and 2 of this  Section,  including  any  remedial  actions,  as  well  as any  measures  taken  in  respect  of  non-compliance with the above-mentioned paragraphs. The Co-ordinating Body Secretariat will notify all Competent Authorities with respect to which this is an Agreement in effect with the first mentioned Competent
Authority.

SECTION 6
Consultations

1.
In case an adjustment of the taxable income of a Constituent Entity, as a result  of further enquiries based on the data in the CbC Report, leads to undesirable economic outcomes, including if such cases arise for a specific business, the Competent
Authorities of the Jurisdictions in which the affected  Constituent  Entities  are  resident shall  consult  each  other  and  discuss  with  the  aim  of resolving the case.

2.
If any difficulties  in  the  implementation  or  interpretation  of  this  Agreement arise,  a Competent  Authority  may  request  consultations  with  one  or  more  of  the
Competent  Authorities  to develop  appropriate  measures to ensure that this
Agreement  is  fulfilled.  In  particular,  a  Competent Authority  shall  consult  with  the other  Competent  Authority,  before the first-mentioned  Competent Authority determines  that  there  is  a  systemic  failure  to  exchange  CbC  Reports  with  the other Competent Authority. Where the first mentioned Competent Authority makes such a determination it shall  notify  the Co-ordinating  Body  Secretariat  which,  after having  informed  the  other  Competent Authority concerned, will notify all Competent
Authorities. To the extent permitted by applicable law, either  Competent  Authority may,  and  if  it  so  wishes  through  the  Co-ordinating  Body  Secretariat, involve  other

P.U. (A) 358 25

Competent  Authorities  that  have  this  Agreement  in  effect  with  a  view  to  finding an acceptable resolution to the issue.

3.
The Competent Authority  that  requested  the  consultations  pursuant  to paragraph  2  shall ensure, as appropriate, that the Co-ordinating Body Secretariat is notified of any conclusions that were reached and measures that were developed, including the absence of such conclusions or measures, and the Co-ordinating Body
Secretariat will notify all Competent Authorities, even those that did not participate in the consultations, of any such conclusions or measures. Taxpayer-specific information, including information that would reveal the identity of the taxpayer involved, is not to be furnished.

SECTION 7
Amendments

This  Agreement  may  be  amended  by  consensus  by  written  agreement  of  all  of  the
Competent Authorities that have the Agreement in effect. Unless otherwise agreed upon, such an amendment is effective on the first day of the month following the expiration of a period of one month after the date of the last signature of such written agreement.

SECTION 8
Term of Agreement

1.
 A Competent Authority must provide, at the time of signature of this Agreement or as soon as possible thereafter, a notification to the Co-ordinating Body Secretariat:

a)  that  its Jurisdiction  has  the  necessary  laws  in  place to  require  Reporting
Entities  to  file  a  CbC Report and that its Jurisdiction will require the filing of
CbC Reports with respect to fiscal years of Reporting Entities commencing on or after the date set out in the notification;

b) specifying whether the Jurisdiction is to be included in the list of non-reciprocal
Jurisdictions;

P.U. (A) 358 26
c) specifying one or more methods for electronic data transmission including encryption;

d) that  it  has  in  place  the  necessary  legal  framework  and  infrastructure  to ensure  the  required confidentiality and data safeguards standards in accordance with Article 22 of the Convention and paragraph 1 and Section 5 of this Agreement, as well as the appropriate use of the information in the CbC
Reports as described in paragraph 2 of Section 5 of this Agreement, and attaching the completed confidentiality and data safeguard questionnaire attached as Annex to this Agreement; and
e) that includes (i) a list of the Jurisdictions of the Competent Authorities with respect to which it intends to have this Agreement in effect, following national legislative procedures for entry into force  (if  any)  or  (ii)  a  declaration  by the  Competent  Authority  that  it  intends  to  have  this Agreement  in  effect with  all  other  Competent  Authorities  that  provide  a  notification  under paragraph 1(e) of  Section 8.

Competent Authorities must notify the Co-ordinating Body Secretariat, promptly, of any subsequent change to be made to any of the above-mentioned content of the notification.

2.
This Agreement will come into effect between two Competent Authorities on the later of the following  dates:  (i) the  date  on  which  the  second  of  the  two  Competent
Authorities  has  provided notification  to  the  Co-ordinating  Body  Secretariat  under paragraph  1  that  includes  the  other Competent  Authority’s  Jurisdiction  pursuant  to subparagraph  1e)  and  (ii)  the  date  on  which  the Convention has entered into force and is in effect for both Jurisdictions.

3.
The Co-ordinating Body Secretariat will maintain a list that will be published on the OECD website of the Competent Authorities that have signed the Agreement and between which Competent Authorities this is an Agreement in effect. In addition, the
Co-ordinating Body Secretariat will publish the  information  provided  by  Competent
Authorities  pursuant  to  subparagraphs  1(a)  and   (b)  on  the OECD website.

P.U. (A) 358 27

4.
The information provided pursuant to subparagraphs 1(c) through (e) will be made available to other signatories upon request in writing to the Co-ordinating Body
Secretariat.

5.
A Competent Authority may  temporarily  suspend  the  exchange  of  information under  this Agreement  by  giving  notice  in  writing  to  another  Competent  Authority that  it  has  determined  that there is or has been significant non-compliance by the second-mentioned Competent Authority with this Agreement. Before making such a determination, the first-mentioned Competent Authority shall consult with the other
Competent Authority.  For the purposes of this paragraph, significant non-compliance means non-compliance with paragraphs 1 and 2 of Section 5 and paragraph 1 of
Section 6 of this Agreement and/or the corresponding provisions of the Convention, as well as a failure by the Competent Authority to provide timely or adequate information as required under this Agreement. A suspension will have immediate effect and will last until the second-mentioned Competent Authority establishes in a manner acceptable to both Competent Authorities that there has been no significant non-compliance  or  that the  second-mentioned  Competent  Authority  has  adopted  relevant  measures that address  the  significant  non-compliance.  To  the  extent  permitted  by  applicable  law, either Competent  Authority  may,  and if it  so  wishes through  the  Co-ordinating  Body
Secretariat, involve other Competent Authorities that have this Agreement in effect with a view to finding an acceptable resolution to the issue.

6.
A Competent Authority may terminate its participation in this Agreement, or with respect to a  particular  Competent  Authority,  by  giving  notice  of  termination  in writing  to  the  Co-ordinating Body Secretariat. Such termination will become effective on the first day of the month following the expiration  of  a  period  of  12  months  after the  date  of  the  notice  of  termination.  In the event of termination, all information previously received under this Agreement will remain confidential and subject to the terms of the Convention.

SECTION 9
Co-ordinating Body Secretariat

P.U. (A) 358 28

Unless otherwise provided for in the Agreement, the Co-ordinating Body Secretariat will notify all Competent Authorities of any notifications that it has received under this
Agreement and will provide a notice to all signatories of the Agreement when a new
Competent Authority signs the Agreement.

Done in English and French, both texts being equally authentic.

ANNEX B:
LIST OF COMPETENT AUTHORITIES
[to be completed]

ANNEX C:
QUESTIONNAIRES
[to be completed]

Made 18 December 2016
[LHDN.01/10.5-1/68.3-45; Perb.0.6869/47(SJ.16)(SK1); PN(PU2)80/LXXXV]

DATUK JOHARI BIN ABDUL GHANI
Second Minister of Finance

[To be laid before the Dewan Rakyat pursuant to subsection 132B(2) of the Income Tax
Act 1967]

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