Malaysia Intensifies Crackdown on Crypto Tax Evasion with Operation “Ops Token”

In a strategic move to curb tax evasion in the cryptocurrency sector, Malaysia’s Inland Revenue Board (IRB) has launched “Ops Token,” a special operation targeting tax revenue leakage from crypto trading activities.

Overview of Ops Token Operation

As reported by The Malaysian Reserve, the IRB’s operation, known as “Ops Token,” saw a concerted effort involving 38 personnel from the Royal Malaysia Police and CyberSecurity Malaysia (CSM). On June 17, these teams conducted simultaneous raids at 10 different locations within the Klang Valley, a key region for business and finance in Malaysia.

The primary focus of the raids was on companies and limited liability partnerships suspected of underreporting or not reporting their crypto trading activities to the federal agency. The Malaysian government has been increasingly concerned about tax revenue leakage and is keen on improving the efficiency of tax administration, especially in the rapidly growing field of cryptocurrency trading.

Malaysian Police Uncover Tax Evasion Evidence

During the raids, authorities discovered significant evidence stored on mobile devices and computers. This data revealed extensive cryptocurrency trading activities and the substantial value of digital assets involved, which had not been declared for tax purposes.

“Through the operation, cryptocurrency trading data stored in mobile devices and computers were found, and we successfully identified the value of digital assets being traded, which caused a very significant leakage of tax revenue,” the IRB reported.

The IRB plans to analyze the data obtained during the raids to assess the full extent of the crypto trading activities and the profits generated. This analysis will help quantify the tax revenue that was evaded and enable the IRB to take appropriate actions against the entities involved.

In a statement following the operation, IRB CEO Datuk Abu Tariq Jamaluddin emphasized that individuals and companies involved in cryptocurrency trading are subject to Malaysia’s income tax regulations. He urged all crypto traders to ensure they properly declare their crypto-related income to the IRB to avoid compliance actions.

“Crypto traders are advised to declare their income accurately to avoid facing enforcement actions. The IRB is committed to ensuring tax compliance and will continue to take steps to enhance tax efficiency and reduce revenue leakages,” Jamaluddin stated.

Implications for Malaysia’s Tax Revenue

The IRB expects that operations like Ops Token will significantly increase Malaysia’s tax revenue by enhancing tax compliance and closing gaps in the reporting of crypto trading activities. This initiative is part of a broader effort to ensure the sustainability of the country’s revenue collection in the digital economy era.

In Malaysia, cryptocurrency is legal but regulated. The Securities Commission Malaysia (SC), which oversees the regulation of capital markets in the country, considers tokens as securities. Consequently, they fall under the country’s securities laws and regulations. However, Malaysia’s central bank does not recognize cryptocurrencies or tokens as legal tender or payment instruments. This regulatory framework subjects crypto-focused businesses to Malaysia’s income tax laws, similar to other financial assets.

The launch of Ops Token by Malaysia’s Inland Revenue Board represents a significant effort to clamp down on tax evasion in the cryptocurrency market. By targeting companies and individuals who fail to report their crypto trading activities accurately, the IRB is reinforcing the importance of compliance in a rapidly evolving digital financial landscape. As Malaysia continues to refine its regulatory approach to cryptocurrencies, initiatives like Ops Token are crucial for maintaining the integrity and sustainability of its tax system.