IRB to curb tax evasion in 2017

KUALA LUMPUR: The Inland Revenue Board (IRB) has its eye on tax evaders and tracking them down will be one of its priorities in 2017.

IRB deputy chief executive Datuk Mohd Nizom Sairi said this is part of the agency’s plans to meet its target of RM127 billion in tax collection for 2017.

Mohd Nizom said this can be achieved in a two-pronged manner, by enhancing collection efforts while increasing the level of compliance by taxpayers by curbing leakages and evasion.

“For example, one specific strategy to curb tax leakages and evasion is to focus on aggressive tax planning,” he said during an event at IRB’s Jalan Duta facility today.

Aggressive tax planning refers to the practice of exploiting legal loopholes or disguising business transactions to reduce taxes beyond the amount which one usually pays.

Mohd Nizom said an Aggressive Tax Planning Division has been set up for the purpose and it will be working closely with the Multinational Tax Branch, Large Taxpayers Branch, Non-Resident Branch, and other departments.

He said the IRB will also be looking out for shell companies set up for the purpose of evading taxes and also foreign companies working with local companies for the same purpose.

“We will also focus more on evasions involving shell companies or abuse of Labuan setups. Based on information collected, we have found that there are non-resident companies in cahoots with resident companies and tax agents to evade tax,” Mohd Nizom said.

Above all, he said, information gathering is equally important and this falls on the Form Q Task Force, which issues the namesake form in requests for information.

Mohd Nizom said those who are issued a Form Q by IRB are compelled to provide the information requested under Section 81 of the Income Tax Act or risk a fine of between RM200 to RM2,000, or a jail term of up to six months, or both.

He said those who were issued Form Q must reply within 30 days, failing which a warning will be issued and an additional 21 days will be given, after which legal action will commence immediately.