IRB to set up special team to address tax avoidance issues


The Inland Revenue Board (IRB) has been entrusted by the government to form a special team to address tax avoidance issues, said Second Finance Minister Datuk Seri Johari Abdul Ghani.

Johari said the Ministry of Finance (MoF) has instructed the IRB to set up a collaborative working group of experts to provide input gathered and technical views from the industry to address the problems.

“Currently this working group — comprising representatives from the government, associations and key accounting firms — is developing a set of guidelines to provide clarity on the technical aspect of withholding tax.

“The guidelines will help to amplify the policy intention of the law that is to develop our domestic services sector, build more local talents and to ensure that cross-border activities are not to be detrimental to the development of our domestic services,” Johari said at the 17th National Tax Conference (NTC 2017) in Kuala Lumpur yesterday.

“In essence, we want to create a culture among our companies to always utilise the services that are provided by Malaysian entities as a starting point,” he added.

In order to improve Malaysia’s tax administration system, Johari said, taxpayers and the IRB need to work together in order to create an improved ecosystem.

“We have also facilitated a lot of things through digitalisation to smoothen the process of tax commitments,” he said.

In the future, Johari said, the government seeks to tackle tax planning strategies that exploit gaps in tax rules to artificially shift profits to low-or no-tax locations.

“We will also impose the requirements for timely collation of data in complying with the country-to-country reporting, together with the increased interactions between tax administrators across multiple jurisdictions.”

“These efforts will have an impact on in-house corporate finance and tax functions across wider business operations such as information and technology, human resources, accounts and data teams,” he added.

To embed an inclusive tax culture, Johari said more actions need to be done by all segments of society.

He said the private sector is in a good position for voluntary compliance, as it will send a good message to the public that every entity is contributing their fair share in the society.

“This move will also help prove that paying taxes is indeed a joint and shared responsibility for all, individual and business entities alike.

“For the masses, knowing that our contribution will eventually be utilised for our own benefits, to help others around us and to propel the growth of our nation, we must take pride every time we fulfil our duties,” he said.

The IRB and the Chartered Tax Institute of Malaysia co-hosted NTC 2017 to update delegates on the current issues, as well as future challenges in the tax administration domestic and international landscape.

Meanwhile, commenting on the upcoming Budget 2018, Johari said MoF is still in the dialogue process and doing the final rounds of screening process to finalise it.

The ministry, according to him, maintains its gross domestic product forecast of between 4% and 5% for this year — despite the 5.6% growth recorded in the first-quarter of 2017.

“Malaysia, being an open economy, we are basically subjected to a lot of external factors in terms of interest hikes, volatility in commodities and geological tensions in certain parts of the world.

“All of these factors are causing uncertainties and we need to ensure that our economy is able to sustain all these challenges,” he added.