Experts: Tax identification number a solution to prevent losses in govt revenue

Finance Minister Lim Guan Eng during the tabling of the budget recently said all Malaysians above the age of 18 and corporate entities will be assigned a TIN, beginning January 2021. — Picture by Choo Choy May
Finance Minister Lim Guan Eng during the tabling of the budget recently said all Malaysians above the age of 18 and corporate entities will be assigned a TIN, beginning January 2021. — Picture by Choo Choy May

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KUALA LUMPUR, Oct 22 ― While details of the Tax Identification Number (TIN) initiative announced in the 2020 Budget are still forthcoming, tax experts believe it will increase the number of registered taxpayers, reduce tax arbitrage activities and prevent any losses in government revenue.

Finance Minister Lim Guan Eng during the tabling of the Budget recently said all Malaysians above the age of 18 and corporate entities will be assigned a TIN, beginning January 2021.

To this end, he said the government will organise engagement sessions with stakeholders next year before the implementation.

Hilda Liow, partner, Global Mobility Services, PwC Malaysia said following the move, the government would be able to make automatic tax registration of both individuals and corporations to facilitate real-time reporting and sharing mechanisms that will reduce administration cost and time.

“TIN will also reduce any tax arbitrage and ensure there is no loss of revenue or reduce the loss of revenue.

“I’m sure these three benefits are the purposes of the TIN introduction, without knowing what actually will be implemented,” she told Bernama.

Hence, Liow said the government needed to put in place a system where the infrastructure for one identification can be introduced.

“In August this year, the government announced efforts to create a National Digital Identity (ID) initiative.

“I think, that’s a starting point if we (are) moving into an automatic registration initiative of individuals above 18 years with TIN,” she added.

The government said a nine-month study on the National ID platform will be carried out by the Malaysian Communications and Multimedia Commission to identify a suitable model for implementation.

“So slowly, we will have a platform, at the minimum, have cross-agencies information sharing that we do need.

“Right now, we don't see any cross-agency information sharing in Malaysia,” Liow said.

Citing an example, she said other countries were implementing a universal identity, that is introduced nationally.

“The advantages of introducing universal ID is to help the individual or corporate sector to use one ID to go into the system.

“It can be e-government services or public or private transactions,” she said, adding Singapore had already implemented the national digital identity to access e-government sites,” said Liow.

For instance, in India and Thailand, the insurance companies’ policyholders’ information is shared with the country’s inland revenue boards.

Meanwhile, Ernst & Young Asean in its note “EY Take 5 for insights into Budget 2020” stated the implementation of TIN will certainly increase the number of registered taxpayers.

It said how the government integrates this digitalised tax identification system with other government and private sector databases such as bank records would determine whether this initiative would achieve its desired objectives. ― Bernama

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