PETALING JAYA: The Malaysian Medical Association (MMA) has refuted reports implying that specialist doctors in private practice have been evading tax by wrongly declaring income under their private limited companies instead of their own names.
MMA president Dr John Chew said doctors in private practice have always been submitting their taxes in the right manner and the Inland Revenue Board has been accepting it.
“It is entirely legal for doctors to form private limited companies and the IRB has always been aware of doctors using these companies. Many doctors have been thoroughly audited over the years.
“Besides, most doctors employ accountants and tax consultants who advise them to form companies to facilitate tax planning. To ignore the advice of a hired professional would be foolish,” he said in a statement here yester-day.
Previously, IRB chief executive officer Datuk Sabin Samitah had stated that over 3,000 specialist doctors underpaid their taxes by wrongly declaring income as corporate income instead of individual income.
The IRB had decided that consultant fees received by specialist doctors from their contract of service with private specialist hospitals is regarded as income from individual business, rather than income of a private limited company.
As such, Sabin explained that doctors would enjoy a lower tax rate when they reported such income as corporate income, as they would otherwise be unable to make certain claims.
However, Dr Chew said it was only in the past that company taxes were almost equal to personal taxes, so any savings on tax would have been negligible.
“For the last few years, company tax has been higher than personal tax. In recalculation, many doctors have overpaid their taxes and will be getting a refund.
“This suggests that tax avoidance is not the primary motivation for setting up private limited companies,” he said.
On the decision by IRB on consultant fees, Dr Chew said the MMA had asked the board for clarification as it was a significant change, and that they had reached a “satisfactory resolution.”
“We are deeply disappointed by the news reports which seemed to imply that tax evasion by doctors is widespread, since we believe the situation is quite the opposite,” he said.
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