Monday, 29 January 2018

Managing Bitcoin Mania in Malaysia

Refer to Veerinder on Malaysian Tax Theory And Practice (4th Edition) for more in-depth information and insights on Malaysia taxation issues.

The Inland Revenue Board (IRB) has recently froze the bank account of Luno, a London-based cryptocurrency exchange and is seeking information on all its Malaysian users, including their identities and complete details of their transactions. It is reasonable to deduce that IRB is concerned about money-laundering and tax evasion.

What is interesting is the lack of mention in the news of the other relevant authorities – Bank Negara Malaysia (BNM) and Malaysian Anti-Corruption Commission (MACC). As you may recall, in early 2017, BNM, IRB and MACC have agreed to collaborate to combat financial crimes, corruption and tax evasion. Are the BNM and MACC actively participating in this investigation?

The move of not imposing an outright ban on cryptocurrencies has allowed the industry to continue flourishing in Malaysia. Cryptocurrency initially started as a method of payment but now has evolved into a dynamic market for investors and speculators. Apart from the conventional investment products (stocks, property, mutual funds, etc.), Malaysians now have another product to put their money in.

The IRB has a right to be clearly concerned – the characteristics of cryptocurrency includes it being decentralised and pseudonymous, a haven for criminals. No matter how innocuous an investor’s intentions may be, the underlying risk for white-collar crime remains, like the forbidden fruit in the Garden of Eden.

It is worth noting, however, with cryptocurrencies becoming more mainstream, it is possible that criminals are looking to transact with a less scrutinised medium. Disruptors such as Bitcoin, Uber, Airbnb, etc. are constantly throwing loops at our regulators. A cool head is needed during these trying times and it should be interesting to see whether the policies of authorities, be it the IRB or BNM, evolve over the next few years to deal and manage business disruptors.

Veerinder on Malaysian Tax Theory And Practice (4th Edition) provides a comprehensive coverage of Malaysian taxation in terms of the legal provisions, case law decisions and the Inland Revenue Board and Royal Malaysian Customs Department practices and guidelines, as well as administrative aspects related to the country’s tax system.

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