On 31 May 2021, the Director General of Tax issued Circular Letter No SE-35/PJ/2021 regarding Guidance on Implementation of Verification of Certificate of Domicile (CoD) during the processes of Tax Audit, Tax Objection, and Reduction or Revocation of Tax Assessment Notices (‘SE-35/2021”).

SE-35/2021 is intended to provide confirmation regarding verification of CoD for Foreign Taxpayers during tax audit, tax objection, and reduction/revocation of Tax Assessment Notices.

In the case that the CoD of a Foreign Taxpayer is provided during a process of tax audit, tax objection, or reduction or revocation of a Tax Assessment Notice, the CoD can be still considered as the basis for application of the provisions stipulated in Tax Treaty, as long as the CoD fulfils the provisions in the relevant Tax Treaty.

The verification process on the CoD can be conducted after fulfilling the formal requirements. The DGT has set the formal requirements in PER-25/PJ/2018. These include stating the validity period clearly and providing a statement that the Foreign Taxpayer is the beneficial owner if this is required in the relevant Tax Treaty.

In SE-35/2021, the CoD for a Foreign Taxpayer which is provided in a process of tax audit, tax objection, or reduction or revocation of Tax Assessment Notice can be considered if the validation by the Competent Authority/CA of the other state is in an electronic signature.

If the CoD of the Foreign Taxpayer does not state the period clearly, the Foreign Taxpayer, through the tax withholder/collector, can complete the CoD of the Foreign Taxpayer and submit it with an additional explanation from the Competent Authority. However. if there is no additional explanation, the CoD is considered as not fulfilling the formal requirements.

Further, the material requirements should be met, i.e. there is no misuse of the tax treaty and fulfilling the provision as beneficial owner if so required in the Tax Treaty.