KUALA LUMPUR: The Inland Revenue Board’s existing structure provides significant autonomy while it continues to act as a government agency, says the Finance Ministry.
The ministry said the Inland Revenue Board of Malaysia Act 1995 states that the LHDN acts as a government agent.
It said the Board provides services related to taxes or other revenues under laws administered by the Board.
“On 6 January 2015, the LHDN became a statutory body with separated remuneration and full autonomy,” it said in a written reply dated November 3.
The ministry said the Board gained independence in financial and human resource management at that point.
It added that taxation policies and frameworks remain under the Finance Ministry’s purview.
Since the restructuring, LHDN’s governance has been regulated under Act 533.
This includes a Board of Directors responsible for transparent and effective administration.
In carrying out its role as a collecting agent, LHDN operates within prevailing laws.
These include the Income Tax Act 1967 and Stamp Act 1949.
They also include the Real Property Gains Tax Act 1976 and Labuan Business Activity Tax Act 1990.
The Petroleum (Income Tax) Act 1967 and Investment Incentives Act 1986 also apply.
The ministry was responding to Datuk Seri Dr Wee Ka Siong (BN–Ayer Hitam).
He asked if the government will study models in the United Kingdom and Australia.
He said those countries have tax agencies accountable directly to Parliament to avoid political interference or fiscal pressure.
The ministry welcomed Dr Wee’s suggestion on LHDN’s restructuring and transformation.
It said the aim is to safeguard taxpayers’ rights and prevent unfair treatment.
It added that continuous legal protection must be ensured.
“In Malaysia, LHDN still acts as a government agent under the Finance Ministry,” it said.
“However, the structure provides significant operational, financial and human resource autonomy,” it added.
“At the same time, alignment with the Finance Ministry ensures taxation policy supports fiscal policy and the annual budget,” it said.
“The government remains open to reviewing and improving LHDN’s governance model,” it added.
This includes examining international best practices to keep LHDN independent and credible.
