Voluntary disclosure program a 'window of opportunity' to avoid future scrutiny from taxman

IRB chief executive officer Datuk Seri Sabin Samitah (centre) at the Malaysian Institute of Accountants (MIA)'s seminar on the Special Voluntary Disclosure Program (SVDP) today. Photos by Patrick Goh

Sabin: As a note of caution, I would like to highlight that it is becoming increasingly difficult to hide undisclosed income with the growing use of technology and big data tools, as well as enhanced international collaboration among regulators.

Accountants paying close attention at MIA's seminar on the SVDP.

-A +A

KUALA LUMPUR (Jan 17): The ongoing Special Voluntary Disclosure Program (SVDP) by the Inland Revenue Board (IRB) is a window of opportunity for affected taxpayers to avoid future scrutiny from the taxman.

Speaking to accountants at the Malaysian Institute of Accountants (MIA)'s seminar on the SVDP today, IRB chief executive officer Datuk Seri Sabin Samitah, who delivered the keynote address at the event, reiterated a point he made at another seminar on SVDP earlier this week — information provided and received by the tax authorities during the SVDP exercise will be treated as confidential in accordance to tax laws.

"With proper compliance, the SVDP is also a window of opportunity for affected taxpayers to avoid future scrutiny, as we will accept in good faith any voluntary disclosures made during the period.

"As a note of caution, I would like to highlight that it is becoming increasingly difficult to hide undisclosed income with the growing use of technology and big data tools, as well as enhanced international collaboration among regulators.

"For example, under the Organisation for Economic Co-Operation and Development's (OECD) initiative to increase transparency of taxation, Malaysia has implemented the Automatic Exchange of Information (AEOI) with other foreign tax authorities to obtain information to support tax audit and tax investigation activities. This initiative started in September last year," said Sabin.

The AEOI is an initiative to boost global transparency and to deter tax evasion. Malaysia is one of 109 countries, including global offshore financial centres, that have agreed to implement this regulation.

The SVDP, which started on Nov 3 last year, offers an avenue for taxpayers to voluntarily declare any unreported income or over-claimed expenses for Malaysian tax purposes.

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

Later at a press conference at the event, Sabin shared that the IRB has sent approximately 3.5 million emails and 4.7 million letters to registered taxpayers to create awareness about the program since November last year.

"The purpose of these letters sent to registered taxpayers, be it individuals or companies, is to inform them about the SVDP program. This is a general letter purely for informational purposes, it's not that the IRB is targeting these people that the letters were sent to, so don't be worried," he said.

He added that the SVDP is part of a new approach by the current ruling government.

"The government would like us to follow the strategy adopted by developed countries, where if possible, we don't want to put a burden [on] the taxpayers in the running of their businesses. If possible, we try to do desk audits only," said Sabin.

Finance Minister Lim Guan Eng had said last year that there will be no more "rough house tactics" employed for tax collection.

In 2019, the federal government's revenue is forecasted 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.