KUALA LUMPUR: Finance Minister Lim Guan Eng says tax evasion can be curbed through the exchange of data, following Putrajaya’s move to abolish the goods and services tax (GST) which the central bank previously said would mitigate the practice of trade mispricing.
Trade mispricing is when individuals attempt to evade tax by over-invoicing imports and under-invoicing exports.
In 2013, Bank Negara Malaysia said the GST would help curb the practice as it required the reporting of value added at various stages of production, making tax evasion more difficult.
In a press conference after launching the Securities Commission’s Fintech Conference 2018 today, Lim said measures like the Organisation for Economic Co-operation and Development (OECD) Common Reporting Standard would help check the evasion of tax.
He said the Common Reporting Standard allowed for information and data to be shared among participating countries, including on bank holdings.
“Even if you hold a bank account in other countries, we will know, so you cannot really evade the payment of taxes.”
He said this exchange of data, coupled with technological advances, would also allow for better detection of illicit outflow.
“The previous administration got it wrong. Cash is not king, data is king,” he added.
On whether the government would consider revisiting the budget due to the drop in global oil prices, Lim said there was no need to do so at the moment.
He said this would only be done if there was a significant drop in oil prices. However, he did not specify to what point prices would need to drop before a revision would be considered.
Crude oil prices plummeted from US$81 per barrel on Oct 16 to US$66 on Nov 15. The government’s budget, which was tabled on Nov 2, was based on oil prices of US$72 per barrel.