Sabin Samitah (fifth left) poses with MIA’s chief executive officer Dr Nurmazilah Dato Mahzan (fourth left), management of IRB and MIA, and other invited guest speakers for a group photo at MIA’s SVDP seminar.
KUALA LUMPUR: The Inland Revenue Board of Malaysia (IRBM) has assured that there are systems in place to curb tax evasions, to ensure a more transparent taxation and business ecosystem.
“It is becoming increasingly difficult for taxpayers to hide undisclosed income with the growing use of technology and big data tools, as well as enhanced international collaboration among regulators and other parties in the global financial ecosystem,” said IRBM chief executive officer Datuk Seri Sabin Samitah in his special address at the Special Voluntary Disclosure Programme (SVDP) seminar, organised by the Malaysian Institute of Accountants (MIA) yesterday.
He noted that under the Organisation for Economic Co-Operation and Development (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.
Taking the cue from other successful international voluntary disclosure programmes in the US, UK, Australia, Japan, Singapore and Indonesia, the latest SVDP was announced by the Minister of Finance Lim Guan Eng on November 2, 2018 during the Budget 2019, to encourage taxpayers to voluntarily disclose their previous undeclared income accurately and to settle tax arrears.
Under the SVDP, taxpayers will be subjected to reduced penalty rates of 10 and 15 per cent of tax payable during the period, and IRBM will accept all disclosures in good faith. Once the SVDP period expires, taxpayers could be subjected to penalty rates of 80 to 300 per cent from July 1, 2019 onwards.
Meanwhile, according to a report by Bernama, IRBM had also pointed out that internet celebrities and other individuals – including minors – who earn income from paid reviews, brand endorsements and businesses conducted via the social media are subject to income tax, if they earn more than RM5,000 a month.
Such income-generating activities are categorised as a profession, therefore those involved will have to declare their earnings, where they will also be allowed to claim for business expenses and tax refunds, if applicable.
Sabin Samitah was quoted as saying that these individuals are welcome to visit IRB offices to obtain advice on income declaration and tax calculation.
“We are using mediums such as television and radio to reach out to them and we have even engaged with non-governmental organisations to go to schools and universities to create awareness on the matter,” he told reporters at the seminar.
Bernama also reported that according to an IRB officer, the board would be able to detect individuals who fail to declare their income when the companies that paid for the internet celebrities’ services declare it in their company’s tax form and share the details on the ambassador or vendors whom they hired.
According to the Income Tax Act 1967, minors who earn incomes in amounts which fall under the taxable income bracket are also subject to tax.
In such cases, the parents or their legal guardians will have to declare the incomes earned by the minors by filing it on their behalf.
Beginning November 16, 2018, LHDNM issued in stages, general e-mails to taxpayers registered in its database, informing them of the details of the SVDP. A total of 3.598 million e-mails were issued. On top of the emails, LHDNM sent out 4.727 million letters based in its contact list, notifying the public that a SVDP was put in place.
The half-day seminar featured a panel session focusing on the SVDP and panellists also clarified questions from the participants. This was followed by a special session on The Five Things Accountants Should Do for Taxpayers, to encourage MIA members to engage more productively with their clients to enhance their services and value to taxpayers, while strengthening tax compliance.