AUDIT group, Deloitte Malaysia, said that the lack of a formal procedure on the waiver of penalties for the Special Voluntary Disclosure Programme (SVDP) on indirect taxes may disincentivise businesses from making disclosures.
“At present, the Royal Malaysian Customs does not have a formal voluntary disclosure scheme for businesses to report errors and obtain waivers of penalties.
“As a result, each disclosure is handled on a case by case basis and there are no published guidelines on when or if Customs could waive penalties,” said its indirect tax leader Tan Eng Yew.
Last month, it was reported that the Finance Ministry (MOF) was contemplating measures on how to increase tax revenue amid the pandemic triggered economic recession. Among the ideas being considered were SVDP.
“Through this programme, taxpayers are encouraged to voluntarily come forward to declare any tax that either has not been paid, underestimated or erroneously reported to RMCD,” the ministry was reported saying.
While he welcomed MOF’s proposal on SVDP, Tan said that more detail is needed on the matter for everyone to have a clearer picture on it.
He added that if the proposal contains details on waiving penalties for disclosures made and have no escalation for an audit to be conducted on the case, it would attract more enterprises to come forward.
“While businesses do their best to stay on top of compliance requirements, as indirect taxes are imposed on a transactional basis (import or manufacture of a good, provision of service), it is easy to get something wrong, and for that error to be compounded across multiple transactions before being discovered.
“And the situation is not helped with our relevant laws and guidance being complex and having its interpretation and application changing overtime,” Tan stated.
He concluded: “It’s easy to get confused and make mistakes when you are dealing with these complex rules. Unfortunately, the risk of getting things wrong is quite high without a formal voluntary disclosure process but I believe the SVDP announcement would encourage greater compliance among businesses.” – Sept 18, 2021
