CYBERJAYA: The Inland Revenue Board (LHDN) said the main challenges facing its Special Voluntary Disclosure Programme (SVDP) to encourage taxpayers come clean with their undeclared incomes are establishing trust and managing perceptions among taxpayers.
LHDN’s CEO Sabin Samitah said the primary objective of the SVDP was to encourage taxpayers, especially those with offshore accounts, to come forward voluntarily and declare income not reported previously or which was under-reported for tax purposes.
“It aims to provide an avenue for taxpayers to come clean in relation to their tax affairs and start afresh from the 2018 assessment year,” Sabin said in an exclusive interview with FMT.
SVDP, mooted by Finance Minister Lim Guan Eng when tabling Budget 2019, provides a reduced penalty of 10% for under-reported income from November 2018 till March 31, 2019, and 15% penalty from the period of April 1 to June 30.
The penalties will revert to the old rates of between 80% and 300% after June 30 on a case-by-case basis.
LHDN collected RM137 billion from income taxes in 2018. This year, it aims to collect RM147 billion.
SVDP is expected to bring in around RM10 billion to RM20 billion to the tax coffers.
“Taxpayers need to put their trust in the tax system in order for the SVDP to run as planned,” said Sabin.
He assured taxpayers any declaration made would be accepted in good faith and would not be subjected to further scrutiny.
Sabin also said any information provided would be kept confidential as stipulated under the Income Tax Act 1967.
SVDP is not a novel programme as it has been implemented in other countries.
Indonesia ran a successful tax amnesty programme in 2017.
Under SVDP, taxpayers are asked to disclose their offshore accounts so that it can be ascertained if the income was sourced in Malaysia and subject to Malaysian tax.
Sabin said in September 2018, Malaysia became a member of the Global Forum on Transparency and Exchange of Information for Tax purposes to conduct the Automatic Exchange of Information initiative introduced by the Organisation for Economic Cooperation and Development.
LHDN then began receiving financial information from its foreign counterparts in relation to information on overseas bank account ownership.
The information obtained will be useful for LHDN and tax authorities around the globe to curb tax evasion which increases tax compliance and lessens tax evasion.