THE Inland Revenue Board (IRB) is no longer required to inform taxpayers when it requests the latter’s bank account details from banks to conduct a review or investigation following an amendment to Section 106A of the Income Tax Act 1967.
According to Reanda LLKG International Chartered Accountants managing partner Koong Lin Loong (main pic), taxpayers in the past must sign a consent form prior to banks furnishing details of their bank accounts to the authorities.
“However, with the inclusion of the proposed section, the authorities are allowed to request information of their clients directly from the banks,” he told Sin Chew Daily. “The bank is not allowed to disclose such request to any person, including the account owner.”
It has been estimated that tax evasion emanating from Malaysia’s shadow economy is worth a whopping RM300 bil annually. The estimate is close to 18% of the country’s gross domestic product (GDP).
Further sharing his view with FocusM, Koong who is also the Associated Chinese Chambers of Commerce and Industry Malaysia (ACCCIM) finance and planning committee chairman added:
“While the tax authority has every right to examine the bank account of taxpayers, the utmost concern is how to prevent abuses as guidelines can be easily breached by unscrupulous staff at both the bank and IRB ends.”
Meanwhile, Datuk Chua Tia Guan who is head of tax & financial consulting at Asia Business Centre Malaysia told Sin Chew Daily that should IRB fail collect tax arrears from taxpayers, it is entitled to seize taxpayers’ assets including savings in the bank if granted a court order.
“The new requirement allows IRB to have direct access to taxpayers’ bank accounts and prohibit the banks from informing the taxpayers,” opined the founding member of the Special Task Force to Facilitate Business (PEMUDAH) at the Prime Minister’s Department.
“The section states that banks are liable to a fine between RM200 and RM20,000 or a maximum jail term of six months or both for violation”.
According to Income tax (Exchange of Information) Rules 2021 which was gazetted on Dec 1, banks do not need to inform taxpayers when the authorities request banks to furnish their bank account information.
According to the Convention on Mutual Administrative Assistance in Tax Matters, foreign governments are allowed to request for their taxpayers’ information in Malaysia and vice-versa, the Malaysian Government can seek wealth information of Malaysians residing in foreign countries.
Since 2016, Malaysia has been exchanging tax-related information with more than 100 countries. – Dec 15, 2021
Photo credit: The Star
