Experts: IRB can earn more revenue through big data

The Inland Revenue Board of Malaysia's (IRB) newly-launched Monitoring Deliberate Tax Defaulters (MDTD) programme will track taxpayers identified as non-compliant.

PETALING JAYA: Big data is key to weeding out tax evasion in Malaysia, estimated at a mind-blowing RM47bil between 2015 and 2016.

Tax experts said that the Inland Revenue Board’s (IRB) adoption of big data technology was expected to improve tax compliance and generate higher tax revenue for the country.

Big data refers to the process of digitally capturing, managing and understanding large volume of data that are unable to be processed by traditional data mining and handling techniques.

Axcelasia Inc chairman Verinderjeet Singh said the process to identify and charge errant taxpayers could be simplified and conducted in a shorter time span by using big data.

Verinderjeet, who is also part of Malaysia’s Tax Reform Committee, described tax evasion in the country as “quite serious” due to the numerous people who under-declared their income or avoided filing tax returns altogether.

IRB chief executive officer Datuk Seri Sabin Samitah was quoted previously as saying that Malaysians dodged nearly RM47bil in taxes between 2015 and 2016.

“Data analytics enables the IRB to collect more data about an individual or a company.

“This includes publicly available information on a person’s spending, wealth, transactions and even lifestyle.

“The collection of such information by the IRB is not new as it has long been done manually. However, with big data technology, we can gather greater depths of data, computerise the information and identify irregularities easily,” he said.

Verinderjeet was commenting on the statement by Finance Minister Lim Guan Eng that the IRB would utilise big data analytics in its investigation on suspected tax evaders.

Ernst & Young Tax Consultants Sdn Bhd partner and Malaysia tax leader Amarjeet Singh said that Malaysia was not the only country resorting to big data to drive tax compliance.

Tax regulators in many nations such as the United States, the United Kingdom, Canada and India, have been using the big data technology to nab tax evaders.

“Overall, tax compliance in Malaysia is fairly good. However, there are gaps that we must look into.

“Apart from those who deliberately misreport their income, there are many who lack adequate knowledge on tax reporting and hence under-report.

“The adoption of big data will help address these gaps,” said Amarjeet.

“The IRB is one of the more advanced in the world in terms of tax administration. Adoption of big data will further improve the agency’s operations in the future,” he said.