While the tax collection agency’s popularity has hit new lows, Sabin is taking it well in his stride

By P PREM KUMAR & ALIFAH ZAINUDDIN / Pic By AFIF ABD HALIM

It has been nine months since Datuk Sabin Samitah was appointed to the most unlikeable position in the country — the head at the Inland Revenue Board (IRB).

The 56-year-old former deputy CEO (tax operation) knows of the “loud resentment” shown against the national tax collection agency.

No one likes to pay taxes although it is an obligation. It strikes the anger chord when you are reminded to pay taxes. Worse, when they knock on your door and demand extra taxes.

While the tax collection agency’s popularity has hit new lows, Sabin — who has been at the agency for more than 30 years — is taking it well in his stride.

“It must be that we are doing our jobs well,” said the Ranau-born Sabin with a smile.

Sabin and the IRB have been very aggressive to protect the nation’s revenue.

This year alone, the IRB has conducted four nationwide operations code named “Op Gegar”, “Op Kutip”, “Op Patuh” and “Op Saji”. Another operation that is targeting professionals is in the pipeline.

The IRB is also facing over 800 pending court cases — including six at the Federal Court.

In an hour-long interview with The Malaysian Reserve, Sabin downplayed his rugged appearance, but defended the IRB’s roles and actions despite public backlash.

A Matter of Efficiency

Last week, the IRB and the Royal Malaysian Customs Department signed a joint audit programme as part of a strategy to improve the country’s tax auditing process.

Under the partnership’s standard operating procedure, officers will be equipped to carry out checks on all companies nationwide. The Klang Valley will be the first.

This came following the IRB’s Op Saji exercise on the food industry and the recent announcement that it would conduct tax audits on professional groups such as lawyers, engineers and doctors.

The back-to-back programmes have raised alarm bells among businesses and owners. They feel like they are being “harassed” with the additional tax audits. Some businesses are claiming such overly action could dampen business confidence and tick off potential investors.

But Sabin defended the IRB’s move as a task to protect the country’s interests.

“Conducting compliance and enforcement activities does not make any tax authority in the world aggres- sive. We are merely safeguarding the country’s revenue and providing fairness to compliant taxpayers,” he said.

“We will continue to work towards increasing the tax compliance rate in the country. For that, we will make compliance easy through our ongoing tax education and awareness programmes, while making non-compliance difficult by using the full and legitimate force of the law,” he added.

For instance, the IRB used the full force of the law in trying to recover back taxes and tax liabilities accrued by Country Heights Holdings Bhd. The agency seized Tan Sri Lee Kim Yew’s fixed deposits worth RM126 million in a foreign bank due to the tax liabilities owed by Country Heights.

Lee is the executive chairman and major shareholder in the firm, and had to act on the taxes and penalties amounting to RM22.7 million owed to the IRB.

Lee was reported as saying he felt humiliated for being investigated under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001.

The IRB was heavily criticised for its treatment towards the tycoon. Some parties even claimed it was selective persecution by the agency.

However, Sabin denied the claims and maintained that all audits were based on a detailed risk analysis by the tax agency and that the actions taken against Lee were warranted and within the laws.

“The Country Heights issue had (been) prolonged for over 10 years. They came forward earlier to ask for leniency and we gave them a lot of leeway.

“The company has contributed a lot to the Malaysian economy. But it did not pay its taxes for the 1997 and 1998 assessments. We had given them ample consideration to make the payment. In the end, we had to take the action as it was unfair to the rest of us,” he said.

It was the first time Sabin had spoken openly on the Country Heights tax issue.

Sabin said the IRB had carried out its functions without fear or favour.

“All audit and investigation activities are carried out based on the procedures that are in place, which target non-compliant taxpayers irrespective of age, gender, race or political inclination.”

Focus-based Strategy

Sabin and the IRB are not finished yet. A wider net is expected to be cast.

Next on the target list: Professional groups. The IRB is expected to launch operations this month, and it has asked these professionals to come for- ward and resolve their tax issues.

“This year, we are more focused on a specific segment so that the audit or investigation is more effective.

“For example, if we go to restaurants for a particular month, we will audit all restaurants.

“And maybe this month or next month, we will conduct audits on the professionals. That is our strategy. It is more focused. We do not want to target everyone at one go,” he said.

Data shared by the IRB indicated that the agency has identified 4,610 cases comprising 3,000 doctors, 182 lawyers, 141 architects and 1,287 engineers owing tax and penalties amounting to RM1.2 billion.

Medical practitioners were put under the spotlight last year, after it was reported that some doctors who provided medical services to hospitals through private companies were under-declaring their income.

Specialist doctors were reported to have declared their income under private limited companies rather than as individual names, resulting in losses to the government’s coffers.

The Malaysian Medical Association strongly refuted the report and denied that doctors were dodging federal taxes.

Its president Dr John Chew Chee Ming was previously quoted as saying there was no basis to the generalisation that doctors do not properly declare their income.

“It is entirely legal for doctors to form private limited companies and the IRB has always been aware of doctors using these companies. Many doctors have been thoroughly audited over the years.

“Besides, most doctors employ accountants and tax consultants who advise them to form companies to facilitate tax planning. To ignore the advice of a hired professional would be foolish,” Chew said in a statement.

Sabin, however, denied making such sweeping claims on the medical fraternity, claiming his action was based on statistics.

“Not all doctors are doing this. But if you say that all doctors have declared their income correctly, it is not true because the statistics show a substantial amount of unpaid taxes,” he said.

An Uphill Task

Sabin and the IRB have their work cut out indeed.

This year, the tax collection agency has a RM127.7 billion tax target. For the first eight months of the year, the agency had collected RM75.7 billion, 3% higher compared to the same period last year.

Despite the improved performance, Sabin said it would be a tall order to realise the full figure, due to the 1% reduction in corporate tax rate.

“The discount in corporate tax has reduced tax collection by RM2 billion this year. We are striving towards the target, but it will be challenging,” he said.

The government’s revenues had thinned due to the global oil price slump. The oil and gas sector, which had once contributed almost a quarter to the country’s revenue, has shrunk to about 10%.

And Sabin admitted the challenge faced from the petroleum sector.

“Currently, we managed to collect only RM3 billion out of the estimated RM8 billion from petroleum tax. So, this is an added challenge for us,” he said.

But the country’s better than expected economic growth for the first-half of this year and companies’ higher profits are giving Sabin a ray of hope.

“If businesses were bad, we will not be able to improve on our tax collection as we have.”

Despite all the criticisms, Sabin remains undisturbed.

“People ask me, how do you go to the doctors when you’re asking them to pay tax?” he said.

“I don’t. I go to government clinics,” he laughed. His sense of humour may not win him awards, but it does keep his spirits up as the IRB continues to ensure that nobody escapes the tax dragnet.