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Borderline between tax avoidance and planning
SM Thanneermalai | 06 Oct 2017 00:30

We are being inundated with announcements by the Inland Revenue Board (IRB) of its forays into investigating or auditing cases involved in aggressive tax planning. The message is: aggressive tax planning could face severe sanctions in the form of penalties and may also lead to prosecution in the courts where a negative outcome could result in the taxpayers being subject to imprisonment. In this climate of fear and trepidation, is there room for tax planning or is it dead?

What is aggressive tax planning?

Datuk Sabin Samitah, the chief executive officer of the IRB, describes it as ignoring the spirit of the law and mainly performed to avoid high tax payments and his deputy, Datuk Mohd Nizom, defines it as the practice of exploiting legal loopholes or disguising business transactions to reduce taxes beyond the amount usually paid. Other common phrases used to describe such activities include unacceptable tax planning, abusive tax planning, and abusive tax avoidance.