LHDN to have access to taxpayers’ bank details under new amendment

PETALING JAYA: The Inland Revenue Board (LHDN) will no longer have to inform taxpayers when requesting their bank account details from banks for review or investigation, according to proposed amendments to Section 106A of the Income Tax Act.

Tax expert Koong Lin Loong told Sin Chew Daily that previously, taxpayers had to sign a consent form before banks could furnish bank account information to authorities.

However, with the inclusion of the proposed section, authorities will be able to request this from banks directly and banks will not be allowed to disclose these requests to any person.

Section 106A is one of the proposed amendments in the Finance 2021 Bill, which has been tabled for first reading in Dewan Rakyat.

Koong said the Personal Data Protection Act (PDPA) would not be applicable when enforcing Section 106A in the future.

According to the PDPA, banks are to acquire taxpayers’ consent before furnishing bank account details to LHDN.

The proposed Section 106A also states that if LHDN charges a taxpayer in court, LHDN is allowed to request for taxpayers’ bank account details once a detention order is issued.

“The authorities can also request for taxpayers’ information from associations to check if income tax was filed from the angle of donations,’’ he said.

It is estimated that tax evasion amounts to a whopping RM300bil each year, or 18% of the country’s gross domestic product.

Koong said Malaysia had signed agreements with 150 countries on automatic exchange of information. Malaysia is also participating in the Organisation for Economic Co-operation and Development (OECD) to comply with international requirements on tax planning.

Datuk Chua Tia Guan, Asia Business Center Malaysia tax and financial consulting head, said when the LHDN fails to collect tax arrears from a taxpayer, it is entitled to seize the taxpayer’s assets, including bank savings, once it is granted a court order.

He told Sin Chew Daily that the new requirement allows LHDN direct access to taxpayers’ bank accounts and prohibits the banks from informing the taxpayers.

“The Section states that banks are liable to a fine of between RM200 and RM20,000, or a maximum of six months' jail, or both, for violation,’’ he said.

According to the Income Tax (Exchange of Information) Rules 2021, which was gazetted on Dec 1, banks do not need to inform taxpayers when the authorities request their bank account information.

According to the Convention on Mutual Administrative Assistance in Tax Matters, foreign governments are allowed to request for their taxpayers’ information in Malaysia.

Chua said likewise, the Malaysian government could also seek Malaysians’ wealth information from other countries.

Since 2016, Malaysia has exchanged information with more than 100 countries automatically, and can receive information on Malaysian citizens’ wealth status overseas. – Sin Chew Daily