IRB chases RM728m in legal suit taxes

By P PREM KUMAR & MARK RAO / Pic By AFIF ABD HALIM

The Inland Revenue Board (IRB) is looking to recover RM728 million in unpaid taxes from the legal suits launched against 1,061 companies.

IRB CEO Datuk Sabin Samitah said both public listed and private limited companies are implicated in the civil actions, code-named “Ops Dakwa”.

Sabin said the companies involved could be forced to wind up operations as a last resort, due to non-compliance.

“We are going after the big companies, which have not paid their taxes. We are going to serve the notice by hand. If they do not want to have a discussion with us on how they are going to pay the tax, we are going to wind up the company,” Sabin told reporters in Kuala Lumpur yesterday, after speaking at the GST Conference 2017.

He said in most of the cases, companies were given a timeframe to make the needed payments and were also allowed an instalment scheme.

“However, some of the companies did not pay according to the instalment schemes that were given to them.”

The operation initiated by the Ministry of Finance unit is part of the aggressive approach in curbing non compliance, as the IRB looks to achieve an ambitious RM127.7 billion in tax revenue for this year.

Efforts include raising the minimum penalty rate from 45% to 100% next year for repeat offenders while spreading out the tax net to include professionals, traditional businesses and digital players alike.

The Malaysian Reserve recently reported that IRB is in the middle of winding up a listed company to recover backdated taxes amounting to RM42 million, and have placed a further 91 publicly traded companies on surveillance for potential discrepancies in their accounts.

Sabin said this aggressive approach to plugging leakages in the tax regime will not negatively impact business prospects in Malaysia.

“[This approach] will not hamper investments into the country because comparatively developed nations have stronger enforcement,” he said.

“What we are seeing now is the tax authorities engaging with the media more this year, whereas before cases were published publicly. Now, even straightforward operations are disseminated through the media.”

IRB is aiming to collect RM127.7 billion in taxes this year, representing a 12% increase from the RM114.02 billion secured last year.

In 2014, the tax authority collected RM126.7 billion in tax revenue only to slip to RM111.8 billion in the following year.

Sabin said IRB is doing its best to achieve the 2017 tax collection target, supported by the recently announced operation which involves large-scale companies.

He added that year-to-date tax revenue is 2% higher than what was achieved in the corresponding period last year.

Malaysia alongside other developing nations is further pushing the Organisation for Economic Cooperation and Development (OECD) to expedite its timeframe to implement laws that will make digital service providers like Uber and Google liable to tax.

“Most of the developing countries are requesting OECD to come with the law next year [as opposed to the scheduled 2020] because we are losing revenue,” Sabin said.

“With the way they (digital service companies) conduct their businesses, about 80% of revenue is transferred to lower tax jurisdictions.”