Setting your tax records straight

Full disclosure: LHDN is beginning its year-long Special Voluntary Disclosure Programme 2.0 (SVDP) on June 1. — RAJA FAISAL HISHAN/The Star

CYBERJAYA: Those who have been evading taxes in the past, whether individuals or companies, will have a chance for a clean slate under an amnesty programme, says the Inland Revenue Board (LHDN).

LHDN begins its year-long Special Voluntary Disclosure Programme 2.0 (SVDP) on June 1 to encourage tax evaders and those who had incorrectly filed their tax returns to come forward to reset and start afresh, said its chief executive officer Datuk Dr Mohd Nizom Sairi.

“There will be zero penalties under SVDP 2.0.

“This is an opportunity for everyone to come forward openly and honestly, especially those who are aware that they have not been paying taxes and have not been declaring or over-claiming tax reliefs or rebates.

“Let us establish a reset and start from a clean slate so that we can move forward after this,” he told The Star in a recent interview.

Although the tax amnesty programme will overlook past discrepancies, he said those who have yet to settle their taxes will still have to do so.

“In terms of amnesty, it means we forgive you, but do not forget that you still have to pay your taxes,” he added.

Mohd Nizom said the programme covers those who have yet to declare their income, including existing taxpayers.

“We have to be fair to existing taxpayers who may have incorrectly filed their taxes and want to come forward in good faith now,” he said.

Under the previous SVDP, a penalty of between 10% and 15% was imposed for the late submission of tax returns by individuals or businesses.

The penalty was also imposed for undeclared or under-declared income, over-claimed expenses, rebates and reliefs, including unreported real property gains tax.

“Many came forward to take part in the previous SVDP.

“However, when the previous programme ended, we found that many individuals and companies that came forward were those who were already under audit or investigation by LHDN.

“They insisted on being part of the SVDP knowing that they would be subjected to a lower penalty of between 10% and 15% instead of between 45% and 65% if audited by LHDN,” said Mohd Nizom.

Some 286,000 taxpayers, of whom 11,000 were new taxpayers, came forward under the first SVDP, which ran for less than a year from Nov 3, 2018, to Sept 30, 2019.

The programme generated about RM7.8bil in additional taxes for the government.

On Feb 24, Prime Minister Datuk Seri Anwar Ibrahim announced the revival of the SVDP under Budget 2023 in line with the Malaysia Madani policy of strengthening the nation’s fiscal and economic position.

The coming SVDP 2.0 begins on June 1 and will end on May 31, 2024, covering both individuals and companies.

It was reported that LHDN anticipates at least 50,000 new taxpayers participating in SVDP 2.0.

The latest tax amnesty programme is expected to see more than RM10bil collected on top of the collection from existing taxpayers.

Although there will be no penalties under SVDP 2.0, Mohd Nizom said there is a caveat.

He said the zero penalty will only apply to individuals and companies not currently under audit or investigation by LHDN.

“Don’t wait till the last minute to participate in the programme. LHDN will continue doing its job of selecting high-risk cases for audit or investigation.

“If you don’t come forward and your case is selected and discrepancies are found, then the window of opportunity for the zero penalty will be closed.

“This is because the element of voluntariness is no longer present since we came to you first instead,” he added.

Mohd Nizom said LHDN expects to see online entrepreneurs and individuals with small businesses that have since expanded but have yet to declare their incomes among those coming forward for SVDP 2.0.

“These individuals may have been too focused on seeing their business grow over the past three years, including during the Covid-19 recovery phase.

“They were either ignorant of their tax obligation or didn’t have time for it.

“Now that a few years have passed, they are unsure of how to settle their taxes and are worried and afraid to come forward,” he added.

Mohd Nizom said the main goal of the amnesty programme was not to generate more revenue but to give individuals and companies a chance to fulfil their tax obligations.

“The SVDP 2.0 will provide an avenue for everyone to come forward and move on in a proper manner, rather than continuing playing cat and mouse with LHDN,” he said.

He added that LHDN will adopt a more facilitatory role to make it easier for everyone to fulfil their tax obligations.

“If it is difficult, we are here to see how we can make it easier, and if it is confusing, we are here to explain.

“If there are disputes, we will negotiate and see if we can come to a mutual agreement,” he said.

He said that both parties can agree to settle disputed matters in court if a resolution cannot be found.

Details on the guidelines and workings of the SVDP 2.0 will be announced before June 1, he added.

Last week, Deputy Finance Minister II Steven Sim said LHDN is on track to set a new record by surpassing the RM176bil target collection for 2023.

LHDN recorded its largest direct tax collection of RM175.4bil in 2022, a 21.75% increase compared with its collection in 2021.

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