PETALING JAYA: The Inland Revenue Board (LHDN) must be clear about its “zero-penalty” Special Voluntary Disclosure Programme 2.0 (SVDP) to avoid misunderstandings or confusion, say experts.
Tax lawyer S. Saravana, from Rosli Dahlan Saravana Partnership, said LHDN must keep its word on the zero penalty for those coming forward in good faith under the amnesty programme.
“The main significance of SVDP 2.0 is that it attracts no penalty. This is a smart move by the Prime Minister, who is also the Finance Minister. It will make taxpayers come forward to make the needful declarations.
“The idea is to make voluntary disclosure work on a no-fault basis,” he said when contacted yesterday.
Saravana said LHDN must also make it clear whether a composite assessment will be given to those coming forward.
“If yes, then it is an attractive proposition that taxpayers are given the certainty and assurance that LHDN will not reopen in the future, the years of assessment for which the SVDP is made,” he added.
Section 96A of the Income Tax Act states that a composite assessment is deemed “final and conclusive.”
He said that under the previous SVDP, taxpayers who came forward voluntarily still came under subsequent investigations, despite some being given a letter of a clean bill of health by LHDN.
“It is only a letter, but in law, the letter doesn’t stop LHDN from reopening the years for which disclosure was made.
“There were cases where the LHDN reopened cases,” he added.
Saravana said he expects to see companies come forward for SVDP 2.0 because there are no penalties.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) treasurer-general Datuk Koong Lin Loong, said LHDN must be clear on the workings of SVDP 2.0 to avoid misunderstandings and confusion.
“Under the previous SVDP, taxpayers thought that if they didn’t report any earlier income and just reported some income, it would suffice and LHDN would accept it in totality.
“Some taxpayers even thought that if they had reported their taxes annually over the years, they would not be audited or investigated if they voluntarily disclosed extra income in those related years,” he said.
He added that under the first SVDP in 2019, a letter of clean bill of health was issued by LHDN saying that previous unreported income that was disclosed would not be investigated.
However, he said that there were cases of LHDN carrying out further probes despite having issued the letter.
“For the coming SVDP, the tax authorities must clearly state that they have the right to seek further clarification if any misleading or misconstrued information is given,” he said.
As for the zero-penalty initiative, Koong described it as a good move as it will encourage more Malaysians to be tax-compliant.
If done properly, he said SVDP 2.0 would boost LHDN’s profile in the eyes of the public while also increasing the number of new taxpayers.
Harvey & Associates managing partner Harvindar Singh said it’s crucial that the guidelines ensure the success of the programme.
“The waiver of penalties is undoubtedly a spur to entice participation.
“This is because taxpayers would be paying the same amount that they were supposed to have paid in the first place without any increase due to penalties,” he said.
He added that taxpayers should also be aware of other initiatives being implemented, such as einvoicing, in stages from 2024 onward.
“Einvoicing will enable the LHDN to have real-time information on business transactions; therefore, this should serve as a cue that moving forward, not much will escape its attention.
“This itself should be incentive enough for the relevant parties to take this opportunity seriously,” he said.
