Govt loses RM1b from professionals who under-declare tax


PETALING JAYA: Professionals owe the government about RM1 billion in undeclared taxes, with doctors accounting for 20 per cent of this group.

The Malaysian Reserve quoted Desmond Anil, a director at Hernancres Tax Consultancy Sdn Bhd, as saying these figures were based on conservative estimates.

He said that with about 20,000 practising doctors in the country, the profession could easily account for between RM200 million to RM1 bil in undeclared tax among professionals.

According to him, such “delinquencies” among medical practitioners occurred when doctors operated their clinics as private limited companies, or “sendirian berhad” (Sdn Bhd).

“Doctors will frequently declare unrelated expenses as tax deductibles under Sdn Bhd. This includes house renovations, vehicle purchases and other medically unrelated items,” Anil was quoted as saying.

Under the Sdn Bhd entity, doctors operate with confined liability and a maximum tax rate of 24 per cent, he added. This system, he said was “open to abuse” as it “vests too much control on the doctors in declaring their income, invoices and expenses.”

Doctors also reportedly gained from the “off-the-paper income” of patients’ payments which were frequently not reported in their balance sheet.

Anil lauded the Inland Revenue Board’s (IRB) new ruling that prevents doctors from practising as private limited companies.

“It holds all medical practitioners liable as the sole proprietor.”

The ruling, enforced this month, will see medical professionals who make in the region of RM150,000 a month, having to fork out their fair share in taxes, and thus, contributing to the country’s revenue.

The IRB last week hauled a heart surgeon to court for evading taxes amounting to about RM6.5 mil.

Dr Lee Chiang Heng was charged with wilfully evading to pay tax for income earned from his private practice and service at a private hospital, amounting to RM25.06 mil, from 2007 to 2011.

Last year, the IRB announced it was targeting three groups – doctors, lawyers and artists, for under-declaring their incomes.