Tham (third left) poses with (from left) Lim, Deloitte Touche Tohmatsu Tax Services’ Tax director Gan Sin Reei, Deloitte Tax Services’ Indirect Tax director Larry James Sta Maria and Deloitte Tax Services’ director Chai Suk Phin.
KUCHING: Tax payers should still continue to do voluntary disclosure even after the Special Voluntary Disclosure Programme (SVDP) has ended, Deloitte advises, particularly since the spotlight now is on Malaysia’s underground economy and shadow economy.
Deloitte highlighted that majority of the country’s revenue still comes from taxes but post-SVDP and with the shortfall in revenue collected from Sales and Service Tax (SST) compared to Goods and Services Tax (GST), revenue must thus come from corporate tax collection to fill the gap.
“How the Inland Revenue Board (IRB) will go about their shortfall is actually looking at ways to enhance their database to be able to track those ‘underground economy’,” Deloitte Tax Services Sdn Bhd director Philip Lim told The Borneo Post yesterday at the Deloitte TaxMax 2019 45th Series Seminar.
“Underground economy here covers not just the illegal part of the economy. It includes foreigners who are here in Malaysia and using a local person as the entity to operate the business but never report taxes.
“These are the activities IRB will be tracking.
“You will probably see more visits from IRB going out, in the sense that they will be looking for businesses which are never registered and then tighten the net and then capture all these entities as part of widening their basket of taxpayers.”
On the Malaysian shadow economy, Lim noted that IRB estimates that it encompasses about 20 per cent of the total gross domestic product (GDP).
“We are looking at RM150 billion as our tax collection, 20 per cent coming from all this shadow economy can be a sizeable sum of tax that the country can collect.
Lim also highlighted that the other part the government will be looking at is the Automatic Exchange of Information (AEOI) whereby people may have parked their assets overseas.
“Hopefully, all these assets are not illegally obtained, then no issue to the taxpayers. The taxpayer would not have to worry about the AEIO.
“However, if anyone had not really reported these assets and parked it overseas, they should take steps to do voluntary disclosure.
“Eventhough the SVDP programme is over, there is still this ongoing voluntary disclosure programme, factored inside the Act itself whereby you can come out and tell the IRB you’ve not reported anything. The penalty is reduced but not eliminated.”
Lim stressed that it will be much reduced, but not as low as SVDP’s penalties of 15 per cent. He also cautioned that if you are caught after the SVDP period, the penalty can be as high as up to 300 per cent.
Meanwhile, Deloitte Touche Tohmatsu Tax Services Sdn Bhd executive director Tham Lih Jiun lauded the tax deduction of up to RM1.5 million for small and medium enterprises (SMEs) and technology companies when listing in the LEAP or ACE markets.
“For the corporate tax, on the cost of listing, if a company goes for listing in Bursa Malaysia in the main board or second board, all these LEAP markets, the listing expenses are not qualified for deduction,” Tham noted.
“This year, the two sectors they are looking at are SMEs and technology companies. If these types of companies were to go and list in the LEAP market or ACE market, the listing expenses can claim deduction of up to RM1.5 million.
“But these companies must list within the year of assessment 2020 to 2022. This is good news to encourage all the SMEs and tech companies to go for listing.”
She also noted that for citizens, they stand to gain from the revision of the Real Property Gains Tax (RPGT) base year.
“Last year, it was introduced that if individuals sell their property after five years, there’s a five per cent tax. But a lot of properties that people buy was many years ago. The acquisition cost could be just RM10,000 and now, when you sell, it could be RM300,000, that is a big gain.
“Last year, when they announced this introduction of this five per cent per disposal after five years, they said that they will use the market value of January 1, 2000. Even if you bought the property in the 1980s or 1970s, that (January 1, 2000) was your cut-off date.
“This year, because people made a lot of noise on this issue, it was changed from January 1, 2000 to January 1, 2013. It’s like a step-up, you can actually have 13 years worth of savings because the market gain between this period of 13 years, you do not need to pay tax on the market value.”