Malaysia: Adopted IRB guidelines on the tax treatment of digital currencies and tokens

On 17 June 2024, the Inland Revenue Board of Malaysia (IRB) adopted guidelines on the tax treatment of digital currencies and tokens. The guidelines provide detailed instructions on how digital currency transactions, such as trading, mining, and exchanges, should be handled under the Income Tax Act 1967. The guidelines are addressed to any individual or entity involved in acquiring, disposing, or conducting business with digital currencies. In particular, the guidelines specify that while gains from active trading are taxable as income, occasional trades resulting in capital gains are not, given Malaysia does not tax capital gains. The guidelines clarify that businesses engaging in digital currency transactions must account for these similarly to traditional business transactions, recognising income based on the market value of goods or services in Malaysian Ringgit. This includes specific scenarios such as using digital currency for business payments, paying employee wages, and investments. Gains from long-term digital currency investments are considered capital gains and are not taxable. The guidelines also cover digital currency received for free, stating that these transactions may be taxable if intended for trading or income generation.