SPECIAL VOLUNTARY DISCLOSURE PROGRAM

Malaysia’s Inland Revenue Board Launches Special Program for Voluntary Disclosure

On 3 November 2018, the Inland Revenue Board of Malaysia (IRBM) issued its Operational Guidelines No. 1/2018. This guideline outlines the implementation procedures of the Special Program for Voluntary Disclosure (Special Program), which is eligible for taxpayers.

Malaysia’s Tax Reform Committee is part of the government’s efforts to help reform the tax system and address issues which are being faced. These issues include tax leakages and trying to reduce the existing gap. The committee is also tasked with finding new sources of revenue to increase tax collection. As part of those efforts, this Special Program was introduced to encourage taxpayers to make voluntary disclosures.

The Objective of Operational Guideline No. 1/2018

The main objective of introducing Operational Guidelines No. 1/2018 is to provide information which explains how the Special Program is going to be implemented. The guideline is also meant to provide information about the implementation period of this Special Program and the reduction in penalty. Aside from that, the guideline also outlines what payment procedures are involved in voluntary disclosure.

The implementation period will be from 3 November 2018 to 30 June 2019, and the applicable legislations include:

The Income Tax Act 1967
Petroleum (Income Tax) Act 1967 (PITA 1967)
Real Property Gains Tax Act 1976 (RPGTA 1976)
Stamp Act 1949 (SA 1949)

Special Program Voluntary Disclosure

Eligible taxpayers will be able to voluntarily disclose their income and pay taxes within the stipulated period. This program was made at an announcement during the 2019 Budget by the Honorable Minister of Finance. The Special Program oversees voluntary disclosure and payment that is made within a stipulated period. This period covers:

Stamping of instruments which were not previously stamped
Income which was not previously declared or under-declared
Expenses which were over-claimed or not allowed
Reliefs, rebates and deductions which were over-claimed
The gains on disposal of assets on real properties, and shares in real property companies

READ ALSO: Update of GST General Guide for Goods written-off

Malaysia is not the only country which offers voluntary disclosure programs. Other countries where such a program exists include Australia, Indonesia, the United States of America, Singapore and the United Kingdom among others. Under this Special Program, taxpayers will also be given the opportunity to report the correct income in view of the implementation of the Common Reporting Standard (CRS) of 30 September 2018. The CRS allows Malaysia to receive financial information from taxpayers of other foreign tax administrations as well.

What Are the Penalty Rates Involved?

If a taxpayer fails to submit their documents on time, they may be liable for penalties after the Special Program period. The minimum penalty rate could start from 80% and range all the way up to 300% for taxpayers who fail to make their disclosure for the ITRF / PRF / RPGTRF.

Taxpayers who fail to report the correct income may be liable to penalties under subsection 113(2) of the ITA 1967 / subsection 52(2) of the PITA 1967 / subsection 30(2) of the RPGTA 1976 at a minimum rate of 80% and up to 100%.

Any person who present instruments for stamping after the stamping period will be liable to penalty under subsection 47A(1) of the SA 1949 on amount of the deficient duty.

Payments Incurred for Voluntary Disclosure

Taxpayers who make voluntary disclosures during the Special Program period will be required to settle their taxes in the following manner:

Payment must be made by 1 April 2019 (For voluntary disclosure periods from 3 November 2018 – 31 March 2019)
Payments must be made by 1 July 2019 (For voluntary disclosure periods from 1 April 2019 to 30 June 2019).

Source: https://www.3ecpa.com.my/taxation-and-gst/irbm-launches-special-program-for-voluntary-disclosure/

Start & End: 06.06.2023 – 31.05.2024

benefit: You won’t be charged a penalty. (There is penalty in SVDP 1.0)

The government will receive all tax disclosure under SVDP 2.0 in good faith, hence they won’t conduct any tax audit or review of these declarations. (Friendly reminder, declare your taxes correctly if you wish to join SVDP 2.0, as LHDN will still conduct tax review if they have any suspicion)

Source: https://landco.my/taxation-en/svdp2/#1581390227049-f3034916-441f