IRB says putting more resources to collect revenue from ‘shadow economy’

IRB’s chief executive officer Datuk Seri Sabin Samitah said the agency would be allocating 80 per cent of its staff for enforcement next year, in line with its focus to tackle the issue of missing revenue from the shadow economy. — Picture by Ahmad Zamzahuri
IRB’s chief executive officer Datuk Seri Sabin Samitah said the agency would be allocating 80 per cent of its staff for enforcement next year, in line with its focus to tackle the issue of missing revenue from the shadow economy. — Picture by Ahmad Zamzahuri

KUALA LUMPUR, Nov 6 — The Inland Revenue Board (IRB) will be putting more resources into its enforcement next year in a bid to address missing revenue from the “shadow economy”.

Shadow or black economy refers to economic activity that is undeclared for which taxes that should be paid are not.

IRB’s chief executive officer Datuk Seri Sabin Samitah said the agency would be allocating 80 per cent of its staff for enforcement next year, in line with its focus to tackle the issue of missing revenue from the shadow economy.

“Usually, we allocate 60 per cent staff for enforcement and 40 per cent for taxpayer awareness but next year we will increase allocation of staff for enforcement to 80 per cent,” he told reporters after launching the 45th Deloitte TaxMax 2019 here today.

Sabin said IRB has divided shadow economy into two categories — foreigners and local.

The board is gathering information from various sources including money changer and remittance, local authority, stamping offices and banks to identify those who are involved in the shadow economy, he said, adding that this include illegal activities such as money lending, prostitute and drug dealing.

“From the tax law perspective, we are only interested in their taxable income, while anything related to illegal activities will be managed by other authorities,” said Sabin.

Last month, the Malaysian Association of Tax Accountants (MATA) president Datuk Abdul Aziz Abu Bakar estimated the size of Malaysia’s shadow economy to be as big as RM300 billion, based on the back-of-envelope calculation.

He added that such unreported business earnings make up 21 per cent of the GDP.

According to Sabin, IRB has conducted field audits to track tax evaders since last month.

The field audits are conducted following the completion of the Special Voluntary Disclosure Programme (SVDP) in September which collected about RM7 billion, he said

IRB would provide business entities with ample time to respond to any of the board enquiries, he said, adding that field audits would only be conducted if business entities failed to provide adequate information to the board. — Bernama

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