KUALA LUMPUR, Oct 8 ― Nothing to panic about Malaysia being listed into the European Commission's updated European Union (EU) grey list, said Deloitte Malaysia international tax leader Tan Hooi Beng.

He said Malaysia has committed to amending its tax law by December 31, 2022, and this is not unexpected as Malaysia has always been a jurisdiction that promotes tax fairness and transparency.

"It is just a matter of time before Malaysia moves to the white list.

"As such, there is no need for anyone to push the panic button,” he said in a statement today.

On October 5, 2021, the European Commission announced that Malaysia, together with Hong Kong, Costa Rica, Qatar, and Uruguay are on the grey list, where these countries have yet to comply with international tax standards but have made commitments to reform tax policies.

Currently, he said Malaysia adopts a territorial tax regime, where only Malaysian-sourced income is within the ambit of its tax net.

Tan said as a result of the foreign source income exemption regimes review, the EU considers Malaysia's territorial sourced tax regime harmful.

The EU has granted Malaysia a deadline of December 31, 2022 to amend its tax regime, and it is understood that Malaysia has agreed to do so.

"As a result of Malaysia's willingness to respond to the EU's concerns, defensive measures by the EU will be suspended, subject to the passing of those amendments.

"Malaysia should not be hasty in amending its tax regime and should continue its good practice of consulting relevant stakeholders,” said Tan.

He added that a robust review is essential including analysing the regimes of countries that are not on the list or have moved out from the list. ― Bernama