The citation is as shown above. The Regulations are deemed to have effect from 1 July 2017.

Provides definitions of terms used in these Regulations. (Definitions of words which are underlined in this Table are found in regulation 2.)

These Regulations have effect for and in connection with the implementation of the Standard (Std) for the purpose of giving effect to the Arrangements. They apply to any Labuan entity which is a Financial Institution as defined in Section VIII of the Std. Non-Reporting Financial Institutions (NRFI) are identified in Reg. 3(3).

For the purpose of these Regulations, the Std shall be applied consistently with the Commentaries on the Std.

Every Reporting Financial Institution (RFI) which is not a NRFI shall identify the Reportable Account (RA) from the Financial Account (FA) maintained by the RFI by applying the due diligence procedure (DDP) as specified in Sections II to VII of the Std.

An account is treated as a RA beginning from the date it is identified as a RA pursuant to the DDPs specified above, and information pertaining to the RA shall be reported annually in the calendar year following the year to which the information relates.

States when a RFI may (for the purposes of Reg. 5):

(a) treat a FA that meets the conditions specified in Reg. 6(1)(a) as other than a RA in the circumstances described in para. B of Section VII of the Std; and

(b) treat a FA that meets the conditions specified in Reg. 6(1)(b) as a FA that is not a RA until the date specified, provided that the FA meets the requirements [(I) to (III)] as stated in that sub-regulation.

Refers to the Second Schedule. In applying the DDP, the relevant dates for the purposes of the provisions of the Std specified in column (2) of that Schedule shall be the dates corresponding against it as specified in column (3).

Also provides for the periods 1.1.2017 to 30.6.2017, and 1.7.2017 to 31.12.2017, to be treated as separate calendar years for the purposes of specified provisions found in the Std.

This regulation relates to accounts with negative balances or values and the determination of the balance or value of accounts denominated in a currency other than the USD.

A FA held by an individual as a partner of a partnership is deemed to be an entity account.

Specific DDP described in the Std are referred to in relation to how each is to be applied to specified accounts. Some of the accounts that are mentioned under Reg. 10 are Lower Value Account and High Value Account (in Reg. 10(1), New Account and Preexisting Account [Reg.10(2) and 10(3)], New Entity Account [Reg. 10(4)]. (Please refer to this Regulation for details.)

Reg.11(1) and 11(2) state the conditions for the application of Reg.10(2) and Reg.10(3) respectively.

Reg.11(3) states that a RFI shall not apply the DDP–

(a)  for New Account to Preexisting Account; and

(b)  for Preexisting Account to a New Account –

except when specific requirements are met which are stated in Reg.11(3)(a) and 11(3)(b) respectively.

States the circumstances under which an Entity is considered as a “Related Entity” of another entity for the purpose of general reporting requirements (Section 1 of the Std) and the application of DDP (Section II to VII of the Std).

Details the requirements to be met under the obligation imposed by Reg.13(1) for a RFI to furnish, in respect of the calendar 2017 and every following calendar year, an information return to the Director General (DG) on or before 30 June of the year following the calendar year to which the return relates, setting out the information required to be reported (as described in the relevant sections of the Std) in relation to every FA identified as a RA that is maintained by the RFI at any time during the calendar year.

States the deadline for furnishing the return under Reg 13(1) for the above mentioned Accounts – i.e. 31.7.2018 for a High Value Account, and 31.7.2019 for a Low Value Account.

The above return shall be furnished on an electronic medium, or by way of electronic transmission in a format to be determined by the DG.

All information obtained under these Regulations may be used by the DG for any purpose related to the administration the LBATA (the Act) or the ITA.

This is stated to be –

Details the requirements relating to retaining and safekeeping of records that a RFI obtains or creates for the purpose of complying with these Regulations, including self certification and records of documentary evidence.

A RFI may appoint a third party as its agent to carry out the obligations imposed on it by these Regulations, subject to the requirements stated under Reg.19(2).

The DG may exercise all powers vested in him under the Act to administer and enforce compliance with the provisions of the Arrangements and these Regulations.

These include the power to obtain information from a FI [Reg.20(2)], to be given free access to enter any premise or place of business of a FI for specified purposes [Reg.20(3)] and to make extracts/ copies of any books, records or other documents or material made available to him for purpose of enforcing or administering these Regulations [Reg.20(4)]

The penalty (upon conviction) for an offence of making an incorrect information return or giving incorrect information under these Regulations is a fine not exceeding RM1 million, or imprisonment for a term not exceeding 2 years or both.

The same penalty as stated above applies upon conviction of an offence for failing to comply with these Regulations. In addition, the court may further order the person convicted of the offence to comply with the relevant provisions of these Regulations within 30 days or such period as the court deems fit, from the date the order is made.

This anti-avoidance provision empowers the DG to disregard or vary the arrangement or practice, or make such adjustments as he thinks fit with a view to counteracting the whole or part of certain effects (direct or indirect) which are described under Reg. 23(a), (b) and (c).

With reference to sub-para. D(2) of Section V and sub-para. A(2) of Section VI of the Std, Reg. 24(1) lists the circumstances under which an Entity is taken not to be a Passive NFE. Nevertheless, for the purpose of the Reg.24(1), a FI shall be taken not to be a Passive NFE for the years 2017 to 2019.

Under S97A(1A) and S97A(2) an appeal may be made under the following circumstances:

If a person has furnished an ITRF under S77(1) or 77A(1) (within the stipulated period) for a year of assessment (YA) in which he has no chargeable income (CI), the ITRF is deemed to be a notification made by the DGIR to that person on the date he furnished that return. He may appeal against the deemed notification within 30 days from the date of being so notified if he is not satisfied  with the tax treatment mentioned in any PR, or any known stand, rules and practices by the DGIR.

(Examples 6 and 7)

Where an ITRF is not required to be furnished for a YA under S77(1), but the person intends to appeal on any tax treatment mentioned in any PR, or any known stand, rules and practices by the DGIR,  he must furnish the ITRF for that YA, and submit an appeal in writing within 30 days after the submission of the ITRF, or after receiving the Notice of Non-chargeability (NONC)

(Example 8 – this illustrates the application of (amongst others) S97A(1A) where a taxpayer who was not chargeable to tax for YA 2016, submitted the ITRF for YA 2016 on 30.6.2017, and that ITRF is deemed to be a notification by the DGIR to the taxpayer under S97A(1A) for the purpose of an appeal to the Special Commissioners of Income Tax.)

The IRBM will issue a written notification to the taxpayer where (as a result of a tax audit) it is found, that the taxpayer is not chargeable to tax under specified circumstances. The specific circumstances are mentioned in para. 4.8(c). (items (i) and (ii)) and the contents of the notification are set out under items (a) and (b) of that same paragraph.

Any appeal to the SCIT on such notification shall be submitted within 30 days after the notification is served.

(Example 9)

(a)  the ITRF has been furnished pursuant to S77(1) or S77A(1);

(b)  all taxes charged for the YA shall be paid.

–    For items (a) and (b) under the above paragraph, within 5 years after the end of the year in which the exemption, relief, remission, allowance or deduction is published in the Gazette, or the approval is granted, whichever is the later; and

–    For item (c) under the above paragraph, within 1 year after the end of the year in which payment is made.

(Examples 12 and 13)

(a) to amend the ITRF in cases of errors or mistakes as specified in para. 12.1.4 of this PR, or

(b)  in cases of non-error or mistake as specified in para. 12.2.3 of this PR.

(i)   for (a) above –  6 months from the date of submission of the ITRF (Example 14):

(ii)  for (b) above – within the period specified in para. 12.2.4 of this PR (Example 15)