This article first appeared in The Edge Financial Daily on February 11, 2019

KUALA LUMPUR: The Special Voluntary Disclosure Programme (SVDP) offers a tax solution for those who have bank accounts overseas but their income is not reported to the Inland Revenue Board of Malaysia (IRB), said Finance Minister Lim Guan Eng.

He said it is the taxpayers in this category who are requested in the e-mails or letters issued by IRB recently, in relation to the SVDP, to contact and report the income to the board.

In a statement yesterday, Guan Eng said his ministry has received many inquiries from individuals who had received the letters and e-mails from the IRB.

“Further to the explanation given by IRB, specifically regarding the advice for recipients of the letters or e-mails to visit IRB’s office, those who have received the letters or e-mails from IRB should not be concerned if they do not have a bank account overseas,” he said.

“Taxpayers with overseas bank accounts may voluntarily declare the income deposited in the overseas bank account whose sources are derived from income received from Malaysia but has yet to be reported or taxed.

“If this income has been reported to IRB or has been taxed and later channelled overseas, then everything is in order based on income tax laws in place,” he added.

Guan Eng said the procedures for opening bank accounts abroad are uniform internationally, where further details on registration and tax information need to be submitted to the authorities of the relevant country.

“Under the Automatic Exchange of Information initiative by the Organisation for Economic Co-operation and Development signed by over 100 countries, IRB has begun receiving financial information in particular the ownership of bank accounts overseas beginning September 2018,” he said.

The SVDP, said Guan Eng, is a tax initiative by IRB which acts to facilitate those who have opened overseas bank accounts with income from Malaysia but that income has not been reported or taxed.

The government has agreed to a reduced penalty rate from 300% to 10% if the declaration is made before March 31 this year, or 15% if it is reported between April 1 and June 30.

He said he has instructed IRB to take firm action against complaints received regarding a few of its officers “who have taken advantage of the implementation of this SVDP, by discharging their duties unprofessionally, threatening taxpayers and not following work procedures in place”.

“I would like to stress that there are no changes in the system and existing quantum of tax penalties for taxpayers in Malaysia (still using the same penalty structure).

“The only change which has been made is to stop raids on the taxpayer's home at midnight by armed and masked officers as was done previously (National Revenue Recovery Enforcement Team or NRRET operations),” he said.

Guan Eng said a new e-mail or letter will be sent by IRB to replace the previous SVDP notification to avoid further misunderstanding.