BFM: Ringgit Q&A: Income TaxFebruary 27, 2020
TTCS: Prihatin Economic Stimulus PackageMarch 27, 2020
The Sun Daily: SOS: Taxpayers Need Help, Not Pressure To Pay Up
Repost of publication on The Sun Daily on 16 March 2020.
Malaysia is in the midst of a “perfect storm” that could derail our economy in 2020. We are facing a COVID pandemic, plummeting oil prices and stock markets together with the sliding business confidence and adding to the problem is the ongoing political saga. To add to our pain, we are an open economy exposed to the ongoing problems around the world.
Business operations in Malaysia are being severely affected due to the COVID crisis: having to ask staff to work from home, disruption of supply chains, business plans being deferred, confidence ebbing, foreign and local markets are shrinking.
The stimulus package announced on 27th February only targeted the tourism industry and SMEs. The tax measures need to be widened to help the economy as a whole rather than confining it to the tourism industry and SMEs.
It is urgent for the new political administration to put in measures that will assist taxpayers rather than pressuring taxpayers for extra collections.
Currently, the feeling on the ground level is that the tax authorities are not showing sufficient sympathy to the taxpayers. The Inland Revenue Board and the Royal Malaysia Customs Department are carrying on with their activities reviewing taxpayer files and issuing assessments / bill of demands as though “business is carrying on as usual”. This is definitely not the case.
What is happening?
The volume of cases that are under tax audits and investigations by both authorities do not appear to have decreased. When such cases are taken up by the authorities, they want to settle these cases within a short span of time. There is a feeling amongst taxpayers that the tax authorities are in a hurry to issue assessments to meet their collection targets.
The tax authorities need to be more understanding by providing taxpayers more time to answer the queries and provide the necessary evidence to support the tax positions taken by them. The taxpayers require more time because of lockdowns, self-quarantine and fear of attending meetings to obtain the necessary information due to the COVID pandemic. Tax authorities must understand the difficulties faced by the taxpayers and provide longer period for tax audits, tax investigations and tax disputes to be resolved. Hurrying taxpayers is not the answer.
What is required from tax authorities?
The most important requirement is an understanding from the tax authorities to allow taxpayers more time in light of the current unexpected impediments. Trying to deal with these matters in writing and over conference calls with the authorities is not the ideal solution as it lacks a dynamic interaction between the taxpayers, taxpayer advisors and the tax authorities. Without face-to-face meetings in many cases, the assessments or bill of demands issued by the authorities in many cases can be subject to dispute.
It is natural for the authorities to say that “if you don’t like it, you can go ahead and appeal”. It is not as simple as that for the taxpayer. The taxpayer has to pay the tax upfront and appeal to the courts if he feels strongly that the assessment is incorrect. The court process may take many years to be resolved and in the current economic downturn, paying such disputed taxes will be a burden.
Taxpayers require the tax authorities to allow them extra time to answer the queries rather than meet the tax authorities’ internal deadlines to close cases. Equally it is important for the tax authorities to “go slow” on pursuing the collections during these difficult times for example: extending the period to settle taxes beyond one year, and for the collections department of both authorities to show greater sympathy to the taxpayers and consider deferring legal action to collect the taxes.
Pressuring taxpayers to settle their tax affairs and pay up quickly is not the answer in the current economic climate. Taxpayers need help and understanding from the tax authorities.