RM200 BILLION OF ‘DIRTY’ MONEY – NOWHERE TO HIDE ANYMORE: BEWARE ILLICIT WEALTH-HOLDERS & TAX EVADERS! IRB NOW HAS LEGAL TOOLS TO GO AFTER YOU – REPORT

KUALA LUMPUR: THE INLAND Revenue Board is fast tightening its noose around those who had generated their wealth though illicit means.

Those who thought they had circumvented the system to evade tax all this while, including by stashing their illicit gains in offshore accounts, should think again.

IRB now has at its disposal the “authority” of more than 100 jurisdictions as it is a signatory to the Convention on Mutual Administrative Assistance in Tax Matters, a tool that has made it easier for the board to go after those breaching tax laws.

The board’s chief executive officer, Datuk Seri Sabin Samitah, said having the international legal instrument effectively widened its reach in exchanging information, as well as in prevention and investigations into tax evasion and fraud.

“We leverage the automatic exchange of information on financial accounts under the Multilateral Competent Authority Agreement with our treaty partners. This is apart from the close to 80 treaty partners under the Double Taxation Agreement,” Sabin 
told the New Straits Times yesterday.

Through these legal tools, IRB would have access to information on extraordinary wealth of individuals and revenues generated through offshore banking transactions.

A report by the Washington-based International Consortium of Investigative Journalists (ICIJ) several years ago suggested that there were more than 1,500 Malaysian-owned offshore companies in Singapore and the British Virgin Islands alone.

It said while many offshore companies carried out legitimate transactions, others were likely to have been involved in the loss of more than RM871 billion through illicit outflows over a 10-year period, as reported by Washington-based financial watchdog Global Financial Integrity (GFI).

GFI has, in the past, reported that at a particular time, close to RM200 billion of “dirty money” was siphoned off from Malaysia.

The leaked ICIJ files provide secret records of offshore holdings of people and companies in more than 170 countries and territories.

Sabin told the New Straits Times Press on Tuesday that individuals red-flagged for possibly having breached the Income Tax Act 1967 would be given a notice for failing to declare possessions, based on checks carried out on the revenue listed in the board’s database.

“The notice, issued through an accompanying letter and form, under Section 79 of the act, would require the recipients to furnish details within 30 days, failing which legal action would follow.

“Section 120 of the same act provides a maximum fine of RM2,000 or six-month imprisonment against any individual who refuses to comply with the notice issued by IRB.”

He said apart from its links with foreign taxation authorities, IRB had also included insurance companies and the Road Transport Department as its “eyes”.

The board also has direct contact with other agencies that would enable it to learn about revenues garnered from commissions, including of agents or middlemen in any business deals.

Finance Minister Lim Guan Eng, in tabling the 2019 Budget last Friday, said IRB would investigate any extraordinary wealth of individuals, who included those who owned luxury items, such as jewellery, watches, handbags, luxury cars and real estate.

He had said the board would take action to recover tax revenue, whether through penalties, fines or supplementary tax.

The ICIJ report quoted a former officer in the IRB who suggested that there are Malaysians who park their money offshore to enjoy significantly lower or no taxes and that when the income is illegal, they are protected by a wall of secrecy.

The former tax investigator was quoted as saying that while the setting up of offshore companies was in itself not illegal, such companies could be used to evade taxes.

NST

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