by TMR/ graphic by MZUKRI
WHILE Malaysians have different views about the tax-filing process to where the tax money goes, one thing for sure is that “tax talk” triggers intense reactions.
In a country with about 2.27 million eligible taxpayers, the Inland Revenue Board (IRB) has identified that income tax is the largest component of the nation’s revenue.
Based on statistics from the Ministry of Finance, income tax contributed 42.6% to the government’s coffers last year, followed by indirect tax and non-tax revenue at 22.8% and 17.2% respectively.
What are these figures telling us? Income tax is one of the important sources of revenue to the country we love. The money you pay in taxes goes to many places.
We have governments at local, state and federal levels. The federal government adopts the principle of separation of powers under Article 127 of the Federal Constitution. It has three branches — namely executive, legislative and judiciary.
On the other hand, the state governments also have their respective executive and legislative bodies.
The civil servants’ salaries come from taxes.
The amount collected from income tax, along with other taxes and revenue, would be used to run the country and to give back to the society.
In short, taxes shift resources from individuals to the government to facilitate spending on public infrastructures.
Paying your income tax is also deemed as an expression of our shared citizenship and mutual responsibility.
Taxes put out fires, keep our streets safe, provide our children with education, provide our families with health care, ensure our food and water are safe, create legal safeguards for businesses and employees, and many more.
In other words, taxes provide us benefits every hour of the day, every day of the year.
A total of three million eligible recipients of Bantuan Sara Hidup (BSH) or Cost of Living Aid are enjoying financial assistance from the government.
BSH offers aid between RM500 and RM1,000, as well as RM120 for each child aged 18 and below (limited to four children), to applicants with a household income of RM4,000 and below.
The money used for the BSH payouts are sourced from tax revenue and have been helpful to the low-income groups.
What if I fail to pay my income tax?
Paying your taxes is considered a civic duty although it is required by the law.
You will face penalties such as fines or imprisonment, if you do not pay your taxes.
Taxpayers who failed to pay their income taxes include individuals, companies and organisations that own extraordinary amount of property and wealth, but failed to declare their assets.
To attract this group of taxpayers, the Special Programme on Voluntary Disclosure was introduced following the 2019 budget announcement by Finance Minister Lim Guan Eng on Nov 2 last year.
This programme is part of the government’s efforts in tax reformation to encourage taxpayers to make voluntary disclosure in reporting their income, as well as to increase tax collection for the country’s development. The voluntary disclosure can be made at the nearest IRB office from
Nov 3, 2018, to Sept 30 this year. Members of the public can make voluntary disclosure in reporting their full income and paying taxes within the stipulated period. The voluntary disclosed information will be accepted in good faith.
With this programme, the taxpayers would enjoy a lower penalty rate of 10% when payment is made on or before July 1 this year. However, a penalty rate of 15% will apply for payment made on or before Oct 1.
Members of the public with enquiries on income tax can visit the nearest IRB offices or contact HASiL Care Line at 1800 88 5436. Alternatively, they can send their feedback via the board’s website at www.hasil.gov.my.