KUALA LUMPUR: The Inland Revenue Board is on an overdrive, using big data analytics to nab those with wealth that cannot be accounted for.
These would include data from the Road Transport Department, Customs Department, government-linked companies and other agencies, said an IRB spokesman.
Through big data, IRB can track a person’s wealth right down to his car, businesses and property ownership.
The spokesman said that “it is an open secret” that the board had been using big data to track tax evaders.
He said IRB had been using data science in its tax evasion investigation for around two years but the new government had since empowered it to take a more aggressive stance in enforcing the law.
And according to IRB chief executive officer Datuk Seri Sabin Samitah, the board had so far identified 79,786 taxpayers, companies, organisations and corporations with extraordinary wealth but had yet to declare their income or had underdeclared it.
His revelation was made at the National Tax Seminar 2018 yesterday, which was also attended by Finance Minister Lim Guan Eng.
Lim warned tax evaders to come forward soon as the IRB had been told to audit and investigate individuals with “extraordinary wealth” as a way for the government to recover lost revenues.
He made it clear that IRB had access to data of a person’s wealth – within and outside the country.
Those who store their assets overseas and monies in offshore accounts will also not go unnoticed.
The government has been sharing information with tax authorities worldwide through the Organisation for Economic and Co-operation and Development’s (OECD) Automatic Exchange of Information (AEOI) portal.
Through the AEOI, the IRB can obtain financial information of individuals and companies including their financial transactions, assets and other tax-related information.
IRB will also be monitoring social media, newspapers and magazines to identify individuals who own more assets than their declared income.
As for companies with “creative reporting” of their income, IRB can detect business transactions such as the acquisition of real properties and vehicles, business licence applications and companies’ registration, and transfer pricing.
The IRB spokesman said its data scientists would collect all these information and use data matching and risk analysis to identify which taxpayer should submit a tax return and which had submitted it incorrectly.
“For instance, a person declares an income of RM100,000 with a payable income tax of RM10,000.
“If we identify that you have more than three registered luxury cars, bungalows and savings in a foreign country, we will then send you a notice under Section 79 of the Income Tax Act to request a justification of your assets,” he said.
Those who have received notices must respond to IRB within 30 days.
Failure to do so is an offence under Section 120 of the Income Tax Act which metes out a fine of between RM200 to RM20,000, or jail up to six months, or both.
“The data science taskforce is expected to grow as IRB has been sending its officers to study data science,” the spokesman said.
Last year, a Washington DC-based think tank Global Financial Integrity ranked Malaysia at fifth among all countries for illicit financial outflows. In “The Illicit Financial Flows To And From Developing Countries: 2005 - 2014: report, it estimated that Malaysia has lost up to about US$431bil (RM1.8 trillion) in illicit outflows between 2005 and 2014.
The government is serious in recovering these illicit outflows and has given tax evaders seven months to disclose their income via the Special Voluntary Disclosure programme. The programme that was announced in Budget 2019 commenced on Nov 3 and ends on June 30, 2019.
Those who voluntarily disclose their income before the deadline will face a small penalty of 10% to 15% of the unpaid taxes.
After this period, tax evaders who are caught will face a whopping 80% to 300% penalty.
Lim urged tax evaders to participate in the special programme or face heavy fines.
He assured them that the National Revenue Recovery Enforcement Team (NRRET) would not be knocking on their doors with weapons, demanding to collect tax arrears.
The Attorney-General has given him the confirmation that the NRRET had been abolished, he said.