IRB plans to increase penalty for tax evasion to 100%

KUALA LUMPUR: The Inland Revenue Board (IRB) plans to increase its penalty to 100% for individuals and companies who evade paying their taxes or misreported tax.

IRB chief executive officer Datuk Sabin Samitah said the new penalty scheme, an increase from the current 45% penalty imposed on unpaid tax, will come into force beginning January next year.

Citing an example, he said, those who evade tax of RM1million would have to pay the amount plus another RM1 million penalty.

“The IRB has conducted studies. We found that the time has come for us to prepare an audit and investigation framework that would include higher penalty rates next year,” he added.

“We plan to increase it to the maximum rate of 100% … Tax evaders would have to pay the outstanding amount and penalty, both at the same time,” he said in a press conference after launching ‘Ops Gegar Bersepadu’ at the Dewan Hasil, government building complex.

Sabin said the increase in penalty would not have to go through law amendment process as the 100% rate is accorded under the Income Tax Act 1967.

“We only have to amend the current framework where the structure of penalty is included,” he said, adding that more companies were expected to be hauled up by the IRB for tax evasion, following recent news report that 30 big companies defaulted their tax payment.

In clarifying the report by Nanyang Siang Pau, Sabin said the total amount of defaulted tax payment was RM2.2 billion, and not RM1.9 billion as reported.

He added the IRB had finalised the case on 10 out of the 30 companies while the remaining 20 will be finalised by the end of this month.

Sabin declined to disclose the names of the companies.