Lower Sabah tax collection: Sabin
Published on: Tuesday, December 20, 2016
Kota Kinabalu: The drop in commodity prices and the slowdown of the oil and gas industry could see the Sabah Inland Revenue Board (IRB) missing its tax collection target for 2016. Direct tax collection stood at RM3.173 billion as of Nov. 30, slightly lower than the projected RM3.591 billion set for this year. Newly-appointed IRB Chief Executive Officer Datuk Sabin Samitah, a Sabahan, said the State's tax collection performance was already satisfactory as the financial year has yet to come to completion. ADVERTISEMENT "In the preliminary stages the drop can be seen due to the fall of commodity prices and reduced activities in the petroleum industry. "The lower collection can be seen in the various supply chain such as hotels, logistics and expatriates' salaries and besides, there are also the security issues in the East Coast areas that's affecting the plantation activities," he said, during a special assembly with the State IRB officers, Monday, his first official visit after being promoted on Dec. 12. Also present were new State IRB Director Dr Sotimin Muhalip, State branch heads and staff. Other factors causing the drop in tax collection this year include the introduction of Stamp Duty exemption in real estate transactions involving Native Titles and the general drop in real-estate transactions due to a lacklustre property sector, as well as tax relief of RM2,000 to individuals earning an aggregate income of RM96,000 and lower following the Budget 2016 adjustments in January this year. ADVERTISEMENT On tax compliance, 5,158 companies were successfully audited with an additional tax and penalties of RM156.261 million were collected, while 58,916 individual tax payers were audited with an additional tax and penalties collection of RM153 million were collected up until Nov 30. Over the same period, IRB also saw a total of 1,071 employers audited, tax settlements of RM42.253 million from 78 investigations and special action on 19 cases involving the settlement of tax valued at RM3.440 million.
ADVERTISEMENT
Meanwhile, 85 new cases were opened by the State IRB's Investigation and Profiling unit while a total of 69,869 individuals settled their dues valued at RM2.3 billion through the board's Volunteer Recognition Programme: Penalty Reduction Offer and Tax Increase Waiver Concession this year, which ended on Dec 15, 2016. Moving forward, Sabin said several new strategies to improve collection have been underlined and would see the State IRB collect up to RM4 billion in 2017, while the Ministry of Finance has set RM127 billion on tax collection for 2017. "We are confident as the size of the country's economy presently stood at RM1.3 trillion, that we would be able to achieve around nine to 10 per cent from the national Gross Domestic Product," he said. The strategies include the formation of the Special Task Force involving 272 tax investigators announced by Sabin announced last week, setting the team an additional collection of RM2 billion as target. The target is 165 per cent higher than the tax investigation settlements in 2015 valued at RM755.44 million. "The special task force will not only investigate tax dodgers under the Income Tax Act 1967 and Anti Money Laundering Act, but also look into multi-national companies. "We have also noticed that multinational companies have shifted quite a substantial amount of their profit to low tax jurisdiction countries."So we have formed an aggressive tax planning division in KL to audit the multi-national companies. We don't want these companies make profit in Malaysia but refuse to pay tax in the country," he said. According to Sabin, another step involves the approach of audit and investigation whereby IRB will no longer carry out focus auditing, but instead holistic auditing approaches. For companies this means IRB will no longer look into sales and purchase, but also into operational costs, expenditures, asset sales and other areas. Meanwhile for individuals, the check will be whether the individual experienced additional flow of income such as owning a business. Sabin also said tax payers who still fail to pay their dues despite a settlement scheme being offered will have their names referred to the Central Credit Reference Information System (CCRIS) next year. "Discussions have started with Bank Negara Malaysia on the best method to list them down on the bad credit system database," said Sabin, adding that the defaulters will have a tough time to obtain assistance from financial institutions once their names are recorded in the system later. Internally, Sabin said the focus is on the capacity building of the IRB staff, stating that the board has now the finances to support its manpower who wished to do overtime, but the involvement of staff in social and sporting activities will be reduced depending on their performance. Stay up-to-date by following Daily Express’s Telegram channel.
Daily Express Malaysia
"Also thanks to the Treasury Secretary-General Tan Sri Dr Mohd Irwan Serigar Abdullah, IRB has now the funds to carry out its all development and operational planning."This include organising activities to encourage the compliance of tax payers to settle their dues and there are still a lot of Sabahans who are not familiar with the provisions of the law on income tax," he said.