Tax Amnesty Plan Could Fill Country S Coffers Expert Says

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GEORGE TOWN: A tax expert has welcomed the move to provide tax amnesty with reduced penalties for those who fail to declare or pay their taxes in the coming year, saying this will encourage more people to pay what they owe and fill the country’s coffers
Tax consultant Veerinderjeet Singh said the Voluntary Reporting Programme announced by the government would push errant taxpayers to pay up, but warned that such amnesty should not last forever
The government announced in its budget yesterday that those who missed out on paying their taxes could do so from tomorrow until March 31 next year with a 10% penalty on the taxes due
If they report between April 1 and June 30, a penalty of 15% will be imposed. The previous penalties ranging from 80% to 300% of the due taxes will take effect again after June 30
Veerinderjeet, who is a member of the National Tax Reforms Committee, told FMT this was a good way to raise funds for now, but cautioned against repeating such plans to ensure compliance by the people
“The lower penalties will also attract more to come up voluntarily to report their incomes and pay their dues,” he said
As for other aspects involving taxes announced in the budget, he said the introduction of a service tax on imported services was a good measure which would level the playing field between local and international players
This was also in line with the policies of other countries which imposed taxes on all online transactions
“Foreign service providers without a base here are doing business from afar without paying any taxes, despite having Malaysians buy, download and use their products here. It is a welcome move,” he said
Veerinderjeet Singh.Veerinderjeet also welcomed the seven-year limit on companies carrying forward their remaining capital allowances, un-utilised residual allowances and unpaid allowances
At present, he said companies could carry forward un-utilised business losses perpetually, which was seen as a way to avoid taxes on profits
“Many countries have a limit. Setting a seven-year limit is a good move as it shows that our tax system is adding provisions to address leaks in revenue.”On a different note, Veerinderjeet called for a “Tax ID” system to further plug leaks from the loss of income, especially in day-to-day businesses, sales and purchase agreements and other similar trade deals
He said assigning a tax ID to each individual or business and requiring these to be filled in every sales and purchase agreement would further boost the country’s coffers
If a party was without the ID, he said, the party paying for the service should withhold the amount due to the provider as a form of “withholding tax” ranging from 5-10%
“This is to bring awareness that tax compliance should be the way of life. And we should be educating all our businesses that tax is important, and you should get a tax ID
“If you have a transaction with someone who does not pay taxes, then that person knows full well that in entering into an agreement with you, he or she will need a tax ID
“This errant taxpayer would have to register for a tax ID and declare what kind of business is about to be done. He will do it if he wants to do business with you
“So the errant person comes back with an ID and places it in the contract. It is a kind of way for us to bring the underground economy back above ground.” - FMT

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