THE Inland Revenue Board (IRB) should realise the linkage between corruption and tax evasion lest it will be difficult to plug tax leakages with collection falling short year after year to the detriment of the government’s coffers.
It is no rocket science that a society that is more corrupt may enable more tax evasion as corrupt officials seek more income via bribes; conversely, higher levels of tax evasion may drive corruption by offering more opportunities for bribes.
Therefore, it did not come as a surprise for the tax collection agency to reveal that it has detected some 31,598 entities comprising individuals, businesses, companies and others owing the Government an estimated more than RM665 mil in tax revenue.
IRB said the entities were identified based on asset ownership as well as their ability to secure financing and/or security valued at RM500,000 and above.
The IRB further advised the entities – in particular 23,751 individuals – to voluntarily appear at their nearest IRB branches to register their income tax files and declare their income.
Ironically, on the same day IRB sought to recover RM665 mil in undeclared taxes, the High Court declared Eric Tan Kim Loong who is said to be an associate of fugitive businessman Low Taek Jho or Jho Low a bankrupt after failing to pay income tax in excess of RM68.33mil (including interest and costs).
On May 4, 2021, the High Court ordered Tan to pay income tax of RM67,996,891.87 and interest at the rate of 5% per annum from the date of judgment until the date of realisation and costs of RM2,000 to the Malaysian Government after he failed to enter an appearance in a suit filed against him by the Government through the IRB (for the assessment year 2010 to 2013).
Imagine that the income tax owed by one single individual like Tan – whose whereabouts remain unknown till today – would have easily made up 10.3% of the ‘missing’ RM665 mil that the IRB was trying to recover.
This means that the IRB needs only to identify another 10 tax evaders like Tan to hit its RM665 mil target. However, if IRB is smart, there are surely ‘tens’ of individuals in the same shoe as Tan who still walk freely despite failing to fulfil their duty as taxpayers.
In fact, what Tan owes IRB dwarfs the sum that former prime minister Datuk Seri Najib Razak has yet to settle with the tax collection agency.
Recall that on May 10 last year, the Federal Court had granted leave (permission) for Najib and his son Datuk Nazifuddin Najib to challenge a summary judgement entered against them to pay RM1.69 bil and RM37.64 mil respectively to the IRB.
On July 22, 2020, the High Court entered the summary judgement against Najib and Nazifuddin by requiring them to pay the said amounts of RM1.69 bil and RM37.64 mil respectively.
The decision was upheld by the Court of Appeal on Oct 21, 2021 but the appellate court granted a stay of the summary judgement decision requiring them to pay the tax.
Here lies the question of whether there is sufficient political will to recover such gargantuan amount of money from influential wrongdoers as doing so is tantamount to undergoing a tedious court appeal process that can drag for months – if not years – and surpassing few changes of government. – June 17, 2022
