IRB: Trust us with voluntary disclosure programme

This article first appeared in The Edge Financial Daily, on January 15, 2019.
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KUALA LUMPUR: Inland Revenue Board (IRB) chief executive officer (CEO) Datuk Seri Sabin Samitah has called on taxpayers to trust the government’s intention to introduce the Special Voluntary Disclosure Programme (SVDP), which was announced during Budget 2019 last year.

Sabin, who was addressing tax experts and reporters at KPMG Malaysia’s dialogue with the IRB yesterday, acknowledged that the public has been sceptical about the programme.

“I am fully aware that there are uncertainties surrounding the SVDP, which include trust issues on the part of taxpayers. However, this programme is a clear indication of the government’s desire to reduce the burden of the people through taxation.

“The fundamental of the Malaysian tax system is based on trust and the SVDP represents an opportunity for taxpayers to trust the IRB,” he said in his keynote address.

The SVDP offers an avenue for taxpayers to voluntarily declare any unreported income or over-claimed expenses for Malaysian tax purposes.

Sabin also said any voluntary declaration made by taxpayers during the programme’s eight-month period from Nov 3, 2018 to June 30, 2019 will be accepted by the IRB in good faith.

“We will not question them on the nitty-gritty, but instead we will assess them on their tax matters as declared,” he added.

Sabin also gave an assurance that the confidentiality of taxpayers’ information will be protected.

“I assure you that your declaration and any information provided will be duly treated as confidential as stipulated under the Income Tax Act 1967. It will not be shared or made known to a third party.

“I hope with this reassurance, any doubt you may still have, had been put to rest and will act as a driving force for you to come forward and do the necessary under the SVDP initiative,” he added.

On whether the SVDP would then place taxpayers on the IRB’s watch list for future tax investigations, Sabin said: “The way we choose our taxpayers to be audited is based on a risk analysis. I think those who joined the SVDP have [in fact] reduced their risks.”

Taxpayers will receive reduced penalty rates during the SVDP offer period. If disclosure of unreported income is made between Nov 3, 2018 and March 31, 2019, the penalty will be 10% of the tax payable. If disclosure is made between April 1 and June 30 this year, the penalty will be 15% of the tax payable.

After the programme ends on June 30, the penalty rates will range from 80% to a maximum of 300% as provided for in the existing tax laws.

It was reported that the SVDP aims to attract at least one million taxpayers, with an estimated RM10 billion collection.

On the tax refunds which the government had said would be paid from a one-off special dividend from Petroliam Nasional Bhd of RM30 billion, special officer to the finance minister Datuk Ooi Kok Seng said the government has not received the funds.

“At the moment the funds are not in as it is only a few days past the new year. However, [the public] should not worry as the finance minister has given the assurance that full refunds will be made through the special dividend,” he said.

In 2019 the federal government’s revenue, including the special Petronas dividend, is forecast at RM261.8 billion, of which tax revenue is estimated at RM176.2 billion, comprising direct tax collection projected at RM135.1 billion and indirect tax collection estimated at RM41.1 billion.