Taxation of Cryptocurrencies: Where Does Malaysia Stand Right Now
Following is the BNM (Bank Negara Malaysia) statement released back on 03 Jan 2014:
“The Bitcoin is not recognised as legal tender in Malaysia. The Central Bank does not regulate the operations of Bitcoin. The public is therefore advised to be cautious of the risks associated with the usage of such digital currency.”
In other words, cryptocurrencies are not considered as money. As a consequence, this complicates the matters when it comes to tax procedures as there are many grey areas and obscurities in taxation of cryptocurrencies.
According to Thanneermalai Somasundaram, managing director of Thannees Tax Consulting Services, it is unlikely that individuals in Malaysia would be taxed for holding cryptocurrencies and using them for goods and services due to the difficulty in tracking users.
Capital gains are not taxed in Malaysia either, except for gains derived from the disposal of real property or on the sale of shares in a real property company. Therefore, it is unlikely that cryptocurrency holders would be taxed on their long-term gains like in the US.
Nonetheless, IRBM (Inland Revenue Board of Malaysia) have jumped into action recently. On Jan 13, Luno issued a statement that its bank account in Malaysia was frozen by IRBM pending an investigation relating to tax matters.
“Though the cryptocurrency business was an unregulated industry in Malaysia, it was subject to Malaysian income tax by virtue of the Section 3 of the Act, whereby tax shall be charged upon the income of any person accruing in or derived from Malaysia,” says the chief executive officer of IRBM, Datuk Seri Sabin Samitah.
He added that all traders should adhere to the Malaysian tax requirement by keeping proper records for audit purposes and disclose any transactions from the cryptocurrency trading when requested by IRBM.