IRB official Datuk Abu Tariq Jamaluddin warns crypto traders to declare taxes or face compliance actions.

The Malaysian federal agency, Inland Revenue Board (IRB), has undertaken a significant initiative to curb tax revenue leakage from cryptocurrency trading through a special operation named “Ops Token.” This initiative reflects the government's commitment to enhancing tax administration and ensuring compliance within the rapidly evolving digital asset sector.

Operation Overview

Objectives and Execution
The operation targeted companies and entities suspected of underreporting or evading taxes on their crypto trading activities. Conducted within Klang Valley, the operation involved:
- Agencies Involved: 38 personnel from the Royal Malaysia Police and CyberSecurity Malaysia (CSM).
- Targets: Limited liability partnerships and corporate entities engaged in crypto trading.

Evidence and Findings
The authorities uncovered substantial cryptocurrency trading data stored on mobile devices and computers during the raids. This data is crucial for:
- Identifying Trade Values: Determining the volume and value of digital assets traded.
- Quantifying Tax Leakage: Estimating the extent of undeclared profits and tax revenue lost.

Statements and Warnings

IRB’s Stance
The IRB emphasized the importance of compliance with income tax regulations, asserting that individuals and entities involved in crypto trading must accurately report their earnings. IRB CEO Datuk Abu Tariq Jamaluddin issued a warning to crypto traders to declare their taxes promptly to avoid enforcement actions.

Goals and Expectations
The IRB aims to enhance Malaysia’s tax revenue by:
- Increasing Tax Efficiency: Improving the accuracy and completeness of tax declarations.
- Reducing Leakages: Minimizing instances of tax evasion through stringent enforcement.

Regulatory Framework

Legal Status and Regulation
Cryptocurrencies in Malaysia are legal and regulated under the purview of the Securities Commission (SC). Key aspects of the regulatory framework include:
- Securities Classification: Cryptocurrencies are treated as securities and are subject to securities laws.
- Central Bank’s Position: The central bank does not recognize cryptocurrencies as legal tender or payment instruments.

Compliance Requirements
Crypto-focused businesses and traders must adhere to income tax laws, ensuring that all crypto-related profits are declared and taxed accordingly. The operation underscores the Malaysian government’s efforts to ensure that the growing crypto market adheres to existing financial regulations.

Conclusion

Malaysia’s “Ops Token” operation marks a significant step towards improving tax compliance within the cryptocurrency sector. By targeting entities that fail to declare their crypto trading activities, the IRB seeks to bolster tax revenue and uphold the integrity of the tax system. As cryptocurrency trading continues to gain popularity, regulatory enforcement and compliance will be pivotal in maintaining a fair and transparent financial ecosystem.