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An Anti-Facilitation of Tax Evasion Policy sets out how a company prevents its employees and associates from helping others evade taxes. In Malaysia, this policy has become essential for businesses following global transparency standards and local tax compliance requirements under the Income Tax Act 1967.

The policy typically outlines risk assessment procedures, due diligence steps for business partners, and clear reporting channels for suspicious activities. It protects organizations from liability while demonstrating their commitment to ethical business practices and compliance with Malaysia's tax laws, including guidelines from the Inland Revenue Board (LHDN).

Consider implementing an Anti-Facilitation of Tax Evasion Policy when your Malaysian business works with international partners, handles large financial transactions, or operates in high-risk sectors like construction or finance. This policy becomes crucial when expanding operations, onboarding new business partners, or responding to increased regulatory scrutiny from LHDN.

The policy proves particularly valuable during tax audits, helping demonstrate your company's proactive compliance measures. It's essential for Malaysian companies engaging with UK-based entities (due to UK tax evasion laws), managing multiple subsidiaries, or working with government contracts where transparency requirements are strict.

• Basic Policy: Focuses on core prevention measures and reporting procedures, suitable for small and medium Malaysian enterprises
• Comprehensive Corporate Policy: Includes detailed risk assessment frameworks and cross-border transaction protocols, ideal for multinational companies
• Industry-Specific Policy: Tailored for high-risk sectors like construction or financial services, with sector-specific red flags and controls
• Group-Level Policy: Designed for corporate groups with multiple subsidiaries, featuring consolidated reporting mechanisms and group-wide compliance standards
• SME-Focused Policy: Simplified version with essential controls and LHDN compliance measures, scaled for smaller business operations

• Board of Directors: Approve and oversee the Anti-Facilitation of Tax Evasion Policy, ensuring it aligns with corporate governance standards
• Compliance Officers: Draft, implement, and monitor the policy, conducting regular risk assessments and training
• Department Heads: Ensure their teams understand and follow policy requirements, reporting potential violations
• Human Resources: Incorporate policy requirements into employee training and conduct background checks
• External Consultants: Provide expertise on Malaysian tax laws and help align policies with LHDN requirements
• Business Partners: Must acknowledge and comply with policy terms when engaging with the organization

• Risk Assessment: Document your company's specific tax evasion risks, international business activities, and high-risk transactions
• Regulatory Review: Gather current LHDN guidelines, Malaysian tax laws, and relevant international compliance requirements
• Internal Controls: Map existing financial procedures, reporting mechanisms, and approval workflows
• Stakeholder Input: Collect feedback from department heads about practical implementation challenges
• Training Needs: Identify which employees need detailed policy training and create educational materials
• Documentation System: Set up record-keeping procedures for policy compliance and incident reporting
• Review Process: Establish regular policy review schedules and update procedures

• Policy Scope: Clear definition of covered activities, entities, and jurisdictions under Malaysian law
• Risk Assessment Framework: Detailed procedures for identifying and evaluating tax evasion risks
• Due Diligence Procedures: Steps for vetting business partners and transactions
• Reporting Mechanisms: Clear channels for reporting suspicious activities to management and LHDN
• Training Requirements: Mandatory staff training protocols and documentation procedures
• Enforcement Measures: Consequences for policy violations and disciplinary procedures
• Review Process: Schedule and procedure for regular policy updates and compliance checks
• Documentation Standards: Record-keeping requirements aligned with Malaysian tax regulations

While both policies address corporate compliance, an Anti-Facilitation of Tax Evasion Policy differs significantly from a Compliance and Ethics Policy in several key aspects:

• Scope and Focus: Tax evasion policies specifically target activities that could enable tax evasion, while compliance and ethics policies cover broader ethical business conduct
• Legal Framework: Tax evasion policies directly align with LHDN requirements and international tax treaties, whereas compliance and ethics policies address multiple regulatory frameworks
• Risk Assessment: Tax evasion policies require specific financial transaction monitoring and tax-related due diligence, while ethics policies focus on general business conduct risks
• Reporting Requirements: Tax evasion policies mandate specific reporting procedures for suspicious tax-related activities, whereas ethics policies often have broader whistleblowing mechanisms
• Training Focus: Tax evasion policies emphasize financial transaction awareness and tax compliance, while ethics policies cover general ethical decision-making