Still time for voluntary tax disclosure


  • Taxation
  • Wednesday, 06 Nov 2019

They can still make voluntary disclosures at any time via letters or e-mails as long as audits or investigations on their files by the Inland Revenue Board (IRB) have yet to commence, said Tax Advisory and Management Services Sdn Bhd chief executive officer Yong Poh Chye.

PETALING JAYA: Taxpayers who have missed the Sept 30 deadline for the Special Voluntary Disclosure Programme (SVDP) can still make voluntary disclosure of their unpaid taxes.

The good news is that they won’t be immediately slapped with the heavy penalty rate of between 45% and 300% as initially announced, although the penalty rates will be higher than the penalty rates imposed during the SVDP period.

They can still make voluntary disclosures at any time via letters or e-mails as long as audits or investigations on their files by the Inland Revenue Board (IRB) have yet to commence, said Tax Advisory and Management Services Sdn Bhd chief executive officer Yong Poh Chye.

“If you haven’t got a call from the IRB or the authorities about your unpaid taxes, then you still have a chance to make your voluntary disclosure, ” said Yong.

The SVDP was introduced during Budget 2019 to coax tax defaulters to voluntarily declare any unreported income, including in offshore accounts, by promising a low penalty rate of only 10% to 15%.

The SVDP, which began on Nov 3 last year, was to have ended on June 30 this year but was extended to the end of September following positive response.

The penalty tax rate will be between 15% and 75%, depending on the late filing period and the severity of the evasion.

Nonetheless, Yong warned that there would be no confirmation letter for taxpayers who make their voluntary disclosure after Sept 30. “The penalty imposed would also definitely be higher than the penalty during the SVDP period, ” said Yong (see charts).

He urged taxpayers to quickly make their submissions and prepare the relevant documents for the years the tax evasions took place. This is because the IRB will likely conduct audits on the years the voluntary disclosure is made.

In mid-September, Finance Minister Lim Guan Eng had said that there would be no more extensions after the Sept 30 deadline.

“After the end of this programme, the IRB has been mandated to impose a minimum penalty rate of 45% and up to a maximum of 300% as stipulated under the Income Tax Act 1967, ” Lim had warned.

The SVDP was initially expected to collect RM10bil from at least one million tax defaulters by June 30.

However, it was reported earlier that only 486,360 cases of voluntary tax declarations were recorded under the SVDP as of June 23 at a rough amount of RM6bil.

Tax collection is still a huge issue in Malaysia.

In its 2020 Fiscal Outlook and Federal Government Revenue Estimates report, the Finance Ministry (MoF) said that tax revenue remained the major contributor to federal government revenue, with an expected total collection of RM189.9bil in 2020.

The MoF expects tax revenue as a percentage of the gross domestic product (GDP) to remain stable at 11.8%.

The collection from direct taxes is estimated to increase by 5.2% to RM142.7bil, constituting 75.1% of total tax revenue. The bulk of the increase is primarily attributed to better collection from the companies income tax and the individual income tax at RM75.5bil and RM37.4bil, respectively.

In the absence of the one-off special dividend from Petroliam Nasional Bhd (Petronas) amounting to RM30bil, non-tax revenue is estimated to decline by 2.4% to RM54.6bil or 3.4% of GDP.

The annual dividend from Petronas is projected at RM24bil.

The MoF said indirect tax collection is expected to increase by 6.5% to RM47.3bil, mainly contributed by higher collection from the sales and service tax (SST).

In 2020, the SST is forecast to register RM28.3bil or about 1.8% of GDP in line with higher consumption, the Visit Malaysia 2020 programme and various international events.

As of end-2017, while 62.4% of 1,251,190 companies were registered with the IRB, only 7.8% were subjected to tax. Likewise, only 16.5% of the 15 million workforce was subjected to personal income tax.

He urged taxpayers to quickly make their submissions and prepare the relevant documents for the years the tax evasions took place. This is because the IRB will likely conduct audits on the years the voluntary disclosure is made.

In mid-September, Finance Minister Lim Guan Eng had said that there would be no more extensions after the Sept 30 deadline.

“After the end of this programme, the IRB has been mandated to impose a minimum penalty rate of 45% and up to a maximum of 300% as stipulated under the Income Tax Act 1967, ” Lim had warned.

The SVDP was initially expected to collect RM10bil from at least one million tax defaulters by June 30.

However, it was reported earlier that only 486,360 cases of voluntary tax declarations were recorded under the SVDP as of June 23 at a rough amount of RM6bil.

Tax collection is still a huge issue in Malaysia.

In its 2020 Fiscal Outlook and Federal Government Revenue Estimates report, the Finance Ministry (MoF) said that tax revenue remained the major contributor to federal government revenue, with an expected total collection of RM189.9bil in 2020.

The MoF expects tax revenue as a percentage of the gross domestic product (GDP) to remain stable at 11.8%.

The collection from direct taxes is estimated to increase by 5.2% to RM142.7bil, constituting 75.1% of total tax revenue. The bulk of the increase is primarily attributed to better collection from the companies income tax and the individual income tax at RM75.5bil and RM37.4bil, respectively.

In the absence of the one-off special dividend from Petroliam Nasional Bhd (Petronas) amounting to RM30bil, non-tax revenue is estimated to decline by 2.4% to RM54.6bil or 3.4% of GDP.

The annual dividend from Petronas is projected at RM24bil.

The MoF said indirect tax collection is expected to increase by 6.5% to RM47.3bil, mainly contributed by higher collection from the sales and service tax (SST).

In 2020, the SST is forecast to register RM28.3bil or about 1.8% of GDP in line with higher consumption, the Visit Malaysia 2020 programme and various international events.

As of end-2017, while 62.4% of 1,251,190 companies were registered with the IRB, only 7.8% were subjected to tax. Likewise, only 16.5% of the 15 million workforce was subjected to personal income tax.

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