Income tax officers to conduct fewer raids this year

tax-lhdn-malaysia-1KUALA LUMPUR: The Inland Revenue Board (IRB) intends to carry out fewer raids, known as field audits, following its aggressive attempts to track tax evaders last year.

According to a report in The Edge Financial Daily, the IRB wants to cause minimal disruption to businesses while carrying out its duty this year.

However, this does not mean the IRB will slow down efforts to increase tax compliance, the report quoted IRB CEO Sabin Samitah as saying.

“This year, we are going to reduce the number of raids because we don’t want to disrupt the [businesses of] taxpayers. Our data matching now [has improved], so we have lots of information without going to the house or business premises. Our profiling is now much better than [in] the previous years.

“Maybe certain cases involving the underground economy [would require tax raids],” he was quoted as saying.

He was referring to activities such as illegal gambling, illegal moneylending and vice activities.

Sabin said while visits to premises by the IRB would be fewer in 2018, the number of desk audits would increase.

“We are not reducing our tax compliance activities this year. In fact, the number of letters we have issued so far to taxpayers who are to be audited was higher in January 2018 compared with January 2017,” he said.

In January this year, the IRB issued 155,152 audit letters, up 2.1% from the 151,955 letters it issued in January 2017.

Sabin said the decision to conduct fewer raids had nothing to do with complaints from businesses last year that they were being inconvenienced.

The IRB launched several operations last year, including Ops Patuh, Ops Dakwa, Ops Saji and Ops Mega.

As a result, The Edge Financial Daily noted, tax demands were slapped on many listed corporations such as MK Land Holdings Bhd, Magnum Bhd, MMC Corp Bhd and Aeon Credit Service (M) Bhd.

This year, Sabin said, the IRB’s focus would be on specialised industries such as banking, insurance and finance.

“Leakages from transfer pricing by certain corporations will be the priority for tax compliance this year. Our focus will also be on companies that are involved in aggressive tax-planning activities, in particular those that transfer their profits to low-tax regimes just to avoid paying the taxes due in Malaysia,” he said.

For 2018, the IRB is targeting a tax collection of RM134.7 billion, 6% more than its 2017 target of RM127 billion.

The report said Sabin declined to specify the total amount of tax collected in 2017. He would only say that it was up 8.15% compared to 2016.

“I can’t let you know the figure because the finance [ministry] has not made the announcement yet,” he was quoted as saying.

The Edge Financial Daily calculated that as the IRB had collected RM114.015 billion in taxes in 2016, an 8.15% increase in tax collection in 2017 would work out to RM123.307 billion.