IRB: No timeline yet for cryptocurrency guidelines

KUALA LUMPUR: The Inland Revenue Board (IRB) is still in the midst of studying the cryptocurrency market and no timeline has been set for the release of the cryptocurrency guidelines, said its regulations and treaty division director Mohamad Fauzi Saat.
“We’re studying thoroughly before we can issue guidelines on cryptocurrencies. We’ll come out with simple principles of tax,” he said at the Malaysian Tax Conference 2018 organised by the Malaysian Institute of Accountants and the Malaysian Association of Tax Accountants today.
Nonetheless, digital currency exchanger Pinkexc Sdn Bhd founder and CEO Fakhrul-Razi Abu Bakar said the authorities’ stance on cryptocurrencies is the missing puzzle, leading to opportunity losses in the digital currency space, which is still in the grey area.
He noted that in order to impose taxes on cryptocurrency transactions, the government needs to categorise it – whether is cryptocurrency, commodity, security or asset.
Fakhrul lauded the sound cyptocurrency framework in Japan with a proper taxation on the conversion of cryptocurrencies into fiat money.
“They also categorised them into first class and second class cryptocurrencies. It is a good example.”
Meanwhile, Trio ADS (Advanced Digital Science) Sdn Bhd director Eric Ong advised the government to provide tax relief for bitcoin mining activities in the event of capital gain tax on cryptocurrencies considering the high equipment and electricity costs incurred.
He warned that Malaysia may lose its competitiveness if hefty taxes are imposed on cryptocurrency mining.
“Foreigners won’t pick Malaysia as their operation centre if the taxes are high. Again, the tax authorities have to look into the rules and regulations.”
As cryptocurrencies do not necessarily have to be pegged to fiat money, Ernst & Young international tax leader Anil Kumar Puri sees difficulties in quantifying the capital gain amount in cryptocurrency investments.
“When a cryptocurrency is pegged to another cryptocurrency, the challenge is that you have to come out with a market value for the cryptocurrency that you have.” – by Lee Weng Khuen