PETALING JAYA: Several proposed changes to the Income Tax Act 1967, aimed at granting more discretionary powers to the Inland Revenue Board (IRB) have been deleted following various lobbies by concerned parties.
These involved several clauses of a bill seeking amendments to particular sections or to introduce new sections to the Income Tax Act, 1967.
A source told StarBiz that MCA president Datuk Seri Dr Chua Soi Lek, members of the MCA Young Professionals Bureau and the Barisan Nasional Backbenchers Club had lobbied for the clauses to be struck off after a public outcry over the proposed amendments.
The amendments, which came under the Finance (No. 2) Bill 2011, were passed in late November following the second and third readings in Parliament.
When this issue was highlighted by StarBiz nearly two months ago, tax specialists had voiced their concerns over the vagueness of the clauses seeking amendments to the Act.
According to sources, the clause seeking amendment to Section 80, to give the IRB director-general (DG) wide-ranging powers to extract information from companies' computer systems, has been deleted.
Tax specialists had earlier pointed out that this clause would have stirred up much opposition from foreign-based multinationals with offices in the country and could even put off those seeking to set up operations here, if they perceived confidential information or proprietary technology might be at risk.
The clause to amend Section 81 has been deleted. This clause allows the DG firstly, to disregard any information or particulars produced by taxpayers upon the expiry period for them to produce their tax information, and secondly, to bar taxpayers from disputing the assessment made under the Act before special commissioners or a court of law.
The clause to introduce a new section, 107D, seeking to allow the DG to direct a taxpayer to make payment via instalments before the issuance of an assessment (should there be reason to believe that the taxpayer had made an incorrect return) has also been deleted.
Tax specialists said the deletion of the three clauses has shown that while the proposed amendments were aimed at strengthening the IRB's enforcement powers, they could not be imposed at the expense of the taxpayers' rights.
KPMG Tax Services Sdn Bhd executive director and head of tax Khoo Chin Guan said the deletion of the proposed amendment to Section 81 was certainly welcome as the ability to produce evidence to prove one's case was central to a system of justice.
He said while the IRB had indicated that this clause would only be used in exceptional circumstances, the provision as drafted was “very wide”.
Khoo added that the IRB would have been left to decide the period of time within which a taxpayer must produce the information while taxpayers would be worried if they could produce the documents by a set date.
To Deloitte Malaysia country tax leader Yee Wing Peng, the deletion of the three clauses spelled “100% success has been achieved” in the opposition to the proposed amendments to the Act.
He said the response by the Government to drop the amendments would be well-received as taxpayers' rights had been reaffirmed and showed an administration that “was people-friendly”.