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Malaysia central bank states Forex is illegal

  • #301
  • Jul 19, 2012 6:14am Jul 19, 2012 6:14am
Quoting skenobi
BNM came out with this Financial Consumer Alert, which had this "list of companies and websites which are neither authorised nor approved under the relevant laws and regulations administered by BNM." (I've uploaded this list here).

I'm not surprised to see some of the names on [url="http://www.bnm.gov.my/documents/2012/Senarai_nama_entiti_dan_laman_sesawang_n.pdf"]that...
I believe if you trade using a prime broker you won't have a problems. Right?
For example, deutsche bank, citi(not retail), hsbc etc
  • #302
  • Jul 19, 2012 6:30am Jul 19, 2012 6:30am
It has nothing to do with prime broker or not. BNM just doesn't want you to speculate using ringgit.

If you are funding an offshore account with so called "prime brokers" (even pariah brokers) using anything other than MYR, then you have no issues.

If you are funding a local account with any broker using MYR, then you cannot trade forex. The only exception is when the broker has been approved by BNM. You gotta check the list.
  • #303
  • Jul 19, 2012 8:55am Jul 19, 2012 8:55am
Quoting thelws
It has nothing to do with prime broker or not. BNM just doesn't want you to speculate using ringgit.

If you are funding an offshore account with so called "prime brokers" (even pariah brokers) using anything other than MYR, then you have no issues.

If you are funding a local account with any broker using MYR, then you cannot trade forex. The only exception is when the broker has been approved by BNM. You gotta check the list.
Surely you won't be using ringgit as it will be converted first preferably to a much more stable currency?
  • #304
  • Jul 19, 2012 9:22am Jul 19, 2012 9:22am
Quoting Supertrader9
Surely you won't be using ringgit as it will be converted first preferably to a much more stable currency?
I don't know if you read the start of the thread....

But BNM doesn't want you to play around with the ringgit. That's all they want.

Whether you convert your ringgit to usd,yen,euro,crona,baht,rupiah etc is up to you. You can do whatever you want with your foreign currency as long as you do not touch the ringgit.
  • #305
  • Jul 19, 2012 11:05am Jul 19, 2012 11:05am
Quoting thelws
I don't know if you read the start of the thread....

But BNM doesn't want you to play around with the ringgit. That's all they want.

Whether you convert your ringgit to usd,yen,euro,crona,baht,rupiah etc is up to you. You can do whatever you want with your foreign currency as long as you do not touch the ringgit.
What i mean is when you want to start trading usually people would choose usd to be their currency and 99% will trade eurusd if they are into fx. So your ringgit is already usd now.
  • #306
  • Edited 9:31pm Jul 19, 2012 11:13am | Edited 9:31pm
Quoting thelws
It has nothing to do with prime broker or not. BNM just doesn't want you to speculate using ringgit.

If you are funding an offshore account with so called "prime brokers" (even pariah brokers) using anything other than MYR, then you have no issues.

If you are funding a local account with any broker using MYR, then you cannot trade forex. The only exception is when the broker has been approved by BNM. You gotta check the list.
Supertrader9, thelws is right: as long as you convert your ringgit asset to another currency legally onshore, you can invest your new foreign currency asset any way you want, subject to certain laws (which you will know about if you have read this thread from start to finish and/or did your own research)

The prime brokers you mentioned do not operate in the same way as their similars in Singapore or Hong Kong. For example, Citibank Malaysia is NOT a full branch of Citibank New York (head office) the way Citibank Singapore is. The reason? Because Citibank Malaysia is "locally incorporated" in Malaysia, as are ALL the foreign banks who have operations in Malaysia.

Therefore it is unlikely a foreign bank will risk losing their local banking license if it facilitates what BNM might consider unsavory speculative activities for their Malaysian customers.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #307
  • Jul 20, 2012 5:55am Jul 20, 2012 5:55am
Quoting skenobi
Supertrader9, thelws is right: as long as you convert your ringgit asset to another currency legally onshore, you can invest your new foreign currency asset any way you want, subject to certain laws (which you will know about if you have read this thread from start to finish and/or did your own research)

The prime brokers you mentioned do not operate in the same way as their similars in Singapore or Hong Kong. For example, Citibank Malaysia is NOT a full branch of Citibank New York (head office) the way Citibank Singapore is. The reason? Because...
I haven't read it all. But yeah then BNM is such a pain in the a**. How the heck would malaysian economy be liberalised if they still think floating exchange is bad. Just look at singapore who makes so much money by becoming a financial hub. If you can keep money flowing in or have so much money inside you could only do wonders..just like switzetrland as example. I don't think BNM(nowadays) understand what speculating is really about. Or they were just paranoid. If i were to make lots of money banks in malaysia would not receive a single benefit from it because BNM sucks.

Come on the market is to trap the money in...BNM should be controlling the rates should they want to. Currency is the most profitable market of all if they do it right. Well whatever.

Okay enough said. Go offshore. Simple.

Skenobi: From you experience, in london session on eurusd what usually on average would be the maximum position you can take without being slipped by more than 2 pips?
  • #308
  • Edited 7:27pm Jul 24, 2012 7:32am | Edited 7:27pm
Quoting Supertrader9

Skenobi: From you experience, in london session on eurusd what usually on average would be the maximum position you can take without being slipped by more than 2 pips?
Sorry for the late reply. I don't trade more than 3lots at a time (trading is not my main source of income; it's integral but not the main). To be honest, I don't really pay attention to my at-the-market fills; I just assume my price was done and/or it wasn't too far (more than 3pips) from my intended level. But I do pay attention to my pending order levels, which I hardly ever place these days due to my current way of trading.

Maybe I SHOULD start paying attention to slippage *shrug* I dunno. Maybe I'm immune to feeling upset about it, numb from all those years of broker BS.. LOL

EDIT: You DID mean as a private trader right? Anyways, I have long accepted slippage to be a fact of life for retail traders. Interdealer brokers are prone to slippages just like retail brokers, but if they do it too often, they lose a lot of big business.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #309
  • Jul 27, 2012 5:04am Jul 27, 2012 5:04am
I am a full time trader. Does anyone know how to declare income from fx in tax? I do not mind getting taxed but its the legality view which I did not
  • #310
  • Jul 28, 2012 2:12am Jul 28, 2012 2:12am
Quoting m888
I am a full time trader. Does anyone know how to declare income from fx in tax? I do not mind getting taxed but its the legality view which I did not
It should be stated as a capital gain (short term) and taxed at that ever changing rate.. Hint..it's about to go up...big.
  • #311
  • Aug 2, 2012 2:36am Aug 2, 2012 2:36am
Quoting m888
I am a full time trader. Does anyone know how to declare income from fx in tax? I do not mind getting taxed but its the legality view which I did not
no tax for FOREX or stockexchange outside malaysia, here is LHDN's staff reply me in email

PHP Code
Tuan,

Emel tuan adalah dirujuk.

Harap maklum bahawa mulai  tahun 2004, pendapatan yang diperolehi dari 
punca luar negara dan di  bawa masuk ke Malaysia adalah tidak dikenakan 
cukai kecuali pendapatan  syarikat Malaysia dari 
perniagaan perbankan, insuran dan pengangkutan  udara dan laut.

Pengecualian ini telah ditetapkan di bawah perenggan 28, Jadual 6 Akta Cukai Pendapatan 1967.

Sekian, harap maklum.

"BERSAMA MEMBANGUN NEGARA"

NADZRI AMIN BIN ABDULLAH
Pusat Khidmat Pelanggan
Jabatan Khidmat Korporat
Lembaga Hasil Dalam Negeri Malaysia
naa 765/07082009
  • #312
  • Aug 2, 2012 10:15am Aug 2, 2012 10:15am
The original question is "how to declare income from FX" to the Malaysian inland revenue agency. Not really whether you're liable for tax or not.

The answer is: Just find the appropriate section in the Form B and just declare!

(And the answer to the other un-asked question of whether we HAVE to declare or not, even tho we might not be liable, is yes you have to declare. Declaring may not mean you have to pay any tax.)

Anyway, my further advice is to go and check with a tax adviser as to whether your FX trading income qualifies as "foreign source income" that is tax exempt.

AFAIK, LHDN treats the term "foreign source income" as meaning income that you earn while being physically located overseas and this income is remitted back to Malaysia. The onus is on you to prove this is the case.

As to whether you can classify your trading profits as exempt from capital-gains tax, my understanding is that if you are "trading" (i.e. it's your full-time job), then it's not "investing" activity.

i.e. Trading is not necessarily investing.

(Don't blame me. I didn't write these stupid rules.)

Again, my advice: check with a tax agent. It doesn't cost much to hire a tax agent to do your taxes once a year. And if one is such a hotshot profitable trader, the cost is negligible.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #313
  • Aug 2, 2012 1:51pm Aug 2, 2012 1:51pm
Quoting skenobi
The original question is "how to declare income from FX" to the Malaysian inland revenue agency. Not really whether you're liable for tax or not.

The answer is: Just find the appropriate section in the Form B and just declare!

(And the answer to the other un-asked question of whether we HAVE to declare or not, even tho we might not be liable, is yes you have to declare.
is it necessary to declare ur earn living abroad (forex) while stated already no need to pay anything? even thought BNM already set out forex is illegally activities. Form my point of views, better no need to declare anything.
sorry of my words, the rest is yours.
regards,
MANSTIR
  • #314
  • Aug 2, 2012 2:02pm Aug 2, 2012 2:02pm
Quoting Manstir
is it necessary to declare ur earn living abroad (forex) while stated already no need to pay anything? even thought BNM already set out forex is illegally activities. Form my point of views, better no need to declare anything.
sorry of my words, the rest is yours.
regards,
MANSTIR

If you never had an inland revenue tax file created in your name, even better. You can stay under the radar and stay that way. If you dare.

But if you DO have a tax file in the LHDN's systems, then you are obliged to declare, regardless of whether or not you are liable to pay any tax.

It's not a question of whether you "need" to or otherwise. You just HAVE to.

As to whether BNM has said forex is "illegal" or whatnot, please point to the exact reference you saw this information in and I may comment on it. No "he says" "she says" business.

In any case, this question of legality has already been addressed in this thread, which you are well advised to read from start to finish so that you may the understand the issues at stake.

It's only 16 pages (to date).

EDIT: Please don't be too quick to decide that you are not liable. From the answer given by the LHDN helpdesk to you, it would seem that it was given on the basis of incomplete information in your original enquiry. (this is my opinion, of course. Please re-read my earlier comments about the definition of "foreign source income")
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #315
  • Edited 9:12pm Aug 2, 2012 2:57pm | Edited 9:12pm
Quoting skenobi
If you never had an inland revenue tax file created in your name, even better. You can stay under the radar and stay that way. If you dare.

But if you DO have a tax file in the LHDN's systems, then you are obliged to declare, regardless of whether or not you are liable to pay any tax.

It's not a question of whether you "need" to or otherwise. You just HAVE to.

As to whether BNM has said forex is "illegal" or whatnot, please point to the exact reference you saw this information in and I may comment on it. No "he says" "she says"...
i'm agree with "when" u already had named on LHDN files, yes u "need to". if not, better remain silence. (not to)
BNM officer's came to my office (seminar) to give advices "not to trade FOREX" and she said "no matter your professional reasons is not occupied anymore". Cannot means "Don't". just as simple as that. without prejudice, I already read ur statements from 1st thread to the end.
thank you for remind me as "not newbies" in this FF Thread.
i'm a silent reader and trader in forex (FF) so i better remain trading in invinsible modes.
  • #316
  • Aug 3, 2012 10:23am Aug 3, 2012 10:23am
The ringgit is still a restricted currency hence why trading forex might be considered "illegal". It all started during the asian financial crisis.

Another reason it might be illegal is because there is a cap on monetary flows of up to USD 10K. If you have that amount going out of the country ie putting it into overseas broker you gotta declare it
  • #317
  • Dec 8, 2012 5:45pm Dec 8, 2012 5:45pm
Quoting m888
I am a full time trader. Does anyone know how to declare income from fx in tax? I do not mind getting taxed but its the legality view which I did not
Hi m888,
Here are my 2 cents. If you have a full time job e.g. Accountant, and trade forex, its consider capital gain. But if you trade for a living (full time trader), you'll need to declare it as income tax.

For better clarification, its better to engage a tax agent/consultant. Then there is also a question of what is taxable, money withdraw back to Malaysia or does it include balance in the Brokerage account. If you decided to engage a tax agent, do update us about it, I believe many is interested to know about it.


Cheers.
  • #318
  • Dec 8, 2012 6:23pm Dec 8, 2012 6:23pm
Quoting victoryong
Hi m888,
Here are my 2 cents. If you have a full time job e.g. Accountant, and trade forex, its consider capital gain. But if you trade for a living (full time trader), you'll need to declare it as income tax.

For better clarification, its better to engage a tax agent/consultant. Then there is also a question of what is taxable, money withdraw back to Malaysia or does it include balance in the Brokerage account. If you decided to engage a tax agent, do update us about it, I believe many is interested to know about it.


Cheers.
No need to declare and pay tax for forex revenue, i already ask LHDN officer about this. If u find my statements not true, please call them
  • #319
  • Dec 9, 2012 2:13am Dec 9, 2012 2:13am
Quoting victoryong
Hi m888,
Here are my 2 cents. If you have a full time job e.g. Accountant, and trade forex, its consider capital gain. But if you trade for a living (full time trader), you'll need to declare it as income tax.
The correct way to state it is, "you'll need to declare the profits as income in the current year of tax assessment." You don't "declare it as income tax."

That "income" is, at that point, only potentially taxable.
I'm not trying to convince anyone. I'm not in the "convincing" business.
  • #320
  • Dec 9, 2012 2:22am Dec 9, 2012 2:22am
Quoting Manstir
No need to declare and pay tax for forex revenue, i already ask LHDN officer about this. If u find my statements not true, please call them
Don't just take Manstir's word for it. Please take responsibility for your actions, find out yourself, and satisfy yourself that your interpretation of the Law is correct.

"No need to pay tax for forex revenue"? Probably true but still need to check as not all retail traders have the same taxpayer profile.

"No need to declare income for tax assessment"? Good luck to you if you agree with that. Especially if you already have a prior tax file number with the authorities.
I'm not trying to convince anyone. I'm not in the "convincing" business.
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