Global Minimum Tax

The Global Minimum Tax represents one of the most significant international tax reforms under Pillar Two of the OECD’s BEPS 2.0 framework. Designed to ensure large multinational groups pay at least a 15 percent effective tax rate (ETR) in every jurisdiction where they operate, the rules fundamentally reshape how global profits are taxed. For Malaysian‑headquartered groups, as well as foreign multinationals operating in Malaysia, the introduction of GMT marks a material shift in compliance expectations, system readiness, and tax governance.

Under the GMT rules, multinational enterprises with consolidated annual revenue above EUR 750 million in at least two of the past four fiscal years will be subject to a 15 percent minimum ETR, regardless of where income is generated or where entities are located. The framework, known as the Global Anti-Base Erosion (GloBE) Rules, was released by the OECD in December 2021 to curb profit shifting into low‑tax jurisdictions and to harmonise global tax outcomes. It reinforces the principle that taxes should be paid where economic activity and value creation occur.

What is the key impact of Global Minimum Tax for Malaysian MNEs?

1. Higher effective tax costs

Groups that historically benefited from low‑tax jurisdictions, incentives, or IP structures may face top‑up taxes to bring the ETR to 15 percent.

2. A more level playing field

GMT reduces tax‑rate driven competition among countries and aligns global competitiveness across businesses, regardless of size or headquarters location.

3. Reduced double taxation risks

A harmonised minimum tax regime may help reduce instances where the same profits are taxed twice in different jurisdictions.

4. Heightened transparency and compliance obligations

GMT reporting introduces new data requirements, complex calculations, and cross‑border information management.

Malaysia and Regional Implementation Timeline

Countries such as Australia, South Korea, Japan and Vietnam have commenced GMT from 1 January 2024. Malaysia, alongside Singapore, Thailand and Hong Kong, is expected to implement GMT from 1 January 2025, giving Malaysian-based groups limited time to prepare for data readiness, modelling, and impact assessments.

What taxpayers should do

Multinational groups operating in or from Malaysia should assess:

Group eligibility – Is your group within scope of GMT?
Exposure to top‑up tax – Based on preliminary ETR modelling.
Jurisdictional impacts – Where will top‑up taxes arise?
Provisioning requirements – For the first year of GMT implementation.
System and data readiness – Can your current processes support GloBE reporting?

Even where Malaysia has not yet implemented domestic top‑up tax, Malaysian entities of in‑scope groups may still be impacted due to Income Inclusion Rules (IIR) or Undertaxed Profits Rules (UTPR) applied by other jurisdictions.

How we can help.

As part of one of Asia-Pacific’s leading boutique transfer pricing firms, Transfer Pricing Solutions offers practical, director‑led Global Minimum Tax support tailored to Malaysian multinational groups. Our team combines deep technical expertise with hands‑on implementation experience across the region. Our GMT support includes:

1. Comprehensive GMT Risk Assessment

We review your group structure, tax profiles and incentive regimes to identify exposure areas and compliance gaps.

2. GMT Modelling and Provision Calculations

Using robust methodologies and specialised tax engines, we calculate indicative ETRs, assess top‑up tax risks, and assist with first‑year provisioning.

3. GloBE Documentation and Reporting

We prepare the required reports, documentation, and supporting analyses to align with BEPS 2.0 Pillar Two requirements.

4. Compliance and Governance Support

Our team keeps you aligned with evolving Malaysian and regional regulations while helping you strengthen internal tax governance.

5. Tax Planning and Optimisation Strategies

We develop practical, compliant strategies to manage ETR outcomes and reduce potential top‑up tax exposure over time.

Transfer Pricing Solutions is recognised for delivering director‑led expertise and practical technical solutions. Our Malaysia and Asia teams bring deep experience in defending complex transfer pricing and international tax positions, with a track record of achieving zero adjustments in major audits.

Global Minimum Tax

With our expertise and commitment to excellence, we help clients navigate the complexities of global tax regulations and optimise their tax positions.

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Global Minimum Tax