Special programme for voluntary disclosure 2.0 for the coming 2022 Budget — Harjit Singh Sidhu

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OCTOBER 11 — As the 2022 budget announcement set forth on 29th of October 2021, which is edging closer by day, not only the Rakyat wishes to have a reduction in tax rates since pay cut or losing jobs thanks to the pandemic seemed inevitable, businesses are in hope to have their own cash assistance to keep them afloat.

Although majority of the businesses are open, many are still cautious to actually spend their money in fear that another lockdown may arise. Many restaurants are still not operating at 100 per cent capacity. The owners have to juggle between keeping a positive cash flow and not risking their staff’s exposure. We have yet to win against the Delta Variant of Covid-19 virus, but life must go on.

Food for thought — How many businesses can survive before it fully recovers? The ripple effect seems endless.

To sustain the Rakyat, the Government will need to consider its revenue stream. Malaysia currently has Direct and Indirect Taxes collection. The examples of direct taxes are Corporate Tax, Personal Tax,

Withholding Tax, Real Property Gain Tax whilst indirect taxes include Excise Duty, Customs Duty, Tourism Tax and Departure Levy.

In 2018, Inland Revenue Board has introduced a Special Voluntary Disclosure Programme (SVDP) in part of government’s efforts in tax reformation. The purpose of this programme is to encourage the taxpayers to come forth to declare tax underpaid with minimal penalty imposed in good faith to prevent further probe in the year of assessment where VD been made.

The duration of the Voluntary Disclosure Programme spanning between November 2018 till September 2019 has allowed extra RM 7.88 billion in taxes collection on top of the usual taxes of RM 137.19 in 2019, RM 137.05 billion in 2018 and RM 123.22 billion in 2017.

Although there are no plans to reintroduce the SVDP, the government should consider reintroducing the similar Voluntary Disclosure Scheme instead of new the taxes especially GST, Capital Gain Tax, Inheritance Tax in the current predicament as the people and companies are just recovering from the impact of the pandemic.

A more thorough Special Voluntary Disclosure Programme under VD 1.0 and VD 2.0 can be segregated as follows.

The Special Voluntary Programme also gives an opportunity to taxpayers to report the correct income in view of the implementation of the Common Reporting Standard (CRS) on 30 September 2018 where Malaysia will be receiving from other foreign tax administration on the financial information of Malaysian taxpayers.

The programme covers voluntary disclosure and payment on:

 (i) income not declared previously / under declared, expenses overclaimed / tax reliefs or deductions overclaimed;

ii) gains on disposal of assets (real properties and shares in real property companies); and

iii) stamping of instruments not previously stamped.

If taxpayers are subjected to tax investigation or tax audit during the VD period, they can use this opportunity to opt for the VD 1.0 or 2.0 to close the case. A temporary measure such as this could boost up tax collection without killing off businesses which are in dire situation to sustain. We need at least 2-3 years for things to go back to the way it is — normality.

As countries with high vaccination rate are now experiencing new high cases, any form of new taxes, will burden the people and the companies, instead the government should introduce or create opportunities for those who have suffered during this pandemic by giving reduction in tax rates especially to industries such as tourism, hotel, manpower, airline companies and restaurant owners. By doing so, businesses should be able to retain their staff and this will reduce the number of Malaysians being laid off jobs.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.

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