OECD blacklists Malaysia for ‘programme enabling tax dodgers’

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KUALA LUMPUR — The Organisation for Economic Cooperation and Development (OECD) has flagged Malaysia as among 21 nations offering easy citizenship or residency that allegedly fuelled the global tax evasion menace.

In a report published by the Paris-based body on Tuesday, Malaysia made the list for its Malaysia My Second Home (MM2H) Programme, which the intergovernmental group categorised as among schemes that commoditised citizenship.

Coincidentally, another major offender highlighted in the list was St Kitts & Nevis, from which fugitive Malaysian financier Low Taek Jho got the passport he is believed to be using to evade detection.

Low is wanted in Malaysia over money laundering charges and in connection with investigations in the 1Malaysia Development Berhad corruption scandal, similar to the menace highlighted in the OECD report.

“While residence and citizenship by investment (CBI/RBI) schemes allow individuals to obtain citizenship or residence rights through local investments or against a flat fee for perfectly legitimate reasons, they can also be potentially misused to hide their assets offshore by escaping reporting,” the OECD said in the statement accompanying the report.

“In particular, identity cards and other documentation obtained through CBI/RBI schemes can potentially be abused to misrepresent an individual’s jurisdiction(s) of tax residence and to endanger the proper operation of the Common Reporting System’s due diligence procedures.”

Besides Malaysia and St Kitts & Nevis, the countries in the list are Antigua and Barbuda, Bahamas, Bahrain, Barbados, Colombia, Cyprus, Dominica, Grenada, Malta, Mauritius, Monaco, Montserrat, Panama, Qatar, Saint Lucia, Seychelles, Turks and Caicos Islands, United Arab Emirates and Vanuatu.

The OECD said it arrived at the report of “high-risk schemes” after analysing residence and citizenship schemes operated by 100 countries.

MM2H is an initiative that allows foreigners to stay in Malaysia for as long as possible on a multiple-entry social visit pass, provided they meet certain criteria.

According to its official website, the prerequisites include showing proof of financial capability, a medical report, a valid medical insurance coverage and bonds.

Direct applicants will have to provide a security bond ranging from RM200 to RM2,000 each, depending on the nationality, while applications made through agents will be borne by the licenced companies. The amount payable, however, was not specified.