by LYDIA NATHAN / pic by TMR FILE

BUSINESSES may be particularly interested in the proposal to implement a Special Voluntary Disclosure Programme for indirect taxes (indirect tax SVDP), according to global firm Ernst & Young (EY).

EY said this following the Ministry of Finance’s (MoF) Pre-Budget Statement (PBS) ahead of Budget 2022 which included various tax-related announcements, including potential avenues to enhance tax compliance and increase tax revenues.

MoF is said to be considering methods to increase the amount of tax collected through more tax compliance.

PBS noted that tax collected from taxpayers was lower than expected so far and a further decrease is to be expected due to the Covid-19 pandemic.

The indirect tax SVDP will be administered by the Royal Malaysian Customs Department (RMCD) after an earlier SVDP administered by the Inland Revenue Board (IRB) to do with income tax, petroleum income tax, real property gains tax and stamp duty had been proposed.

“Under the indirect tax SVDP, taxpayers will be encouraged to voluntarily disclose any unpaid indirect taxes, underpaid indirect taxes or erroneous indirect tax filings or submissions, to the RMCD.

“Similar to the SVDP administered by the IRB previously, it is expected that reduced penalties will be imposed on taxpayers participating in the indirect tax SVDP. It is also possible that after the indirect tax SVDP period expires, the RMCD will enhance enforcement actions and increase penalties,” EY stated.

It also noted the period within which the voluntary disclosures can be made and the conditions to the indirect tax SVDP have yet to be announced as taxpayers eagerly await more information.

“The indirect tax SVDP will allow taxpayers to conduct a self-review, rectify errors and omissions, make good underpaid indirect taxes with reduced penalties, and move forward with a clean slate.

“The RMCD, meanwhile, would be able to increase its indirect tax revenue, reduce time spent on taxpayer audits and can look forward to enhanced compliance moving forward,” it said.

The SME Association of Malaysia showed a strong dissatisfaction towards the suggested Goods and Services Tax (GST) implementation next year, especially the proposed 4% tax rate.

The association said this will not only increase cost and affect businesses recovering but also disrupt operations.

National president Datuk Michael Kang said GST was much better than the Sales and Service Tax but now was not a good time to introduce it as he does not foresee a recovery taking place anytime soon.

“We should learn from the bad experience with 2015’s GST. The government should only consider the implementation of the GST when our economy recovers, possibly in 2023 or 2024,” he said.