Former IRB D-G appointed as chair of tax reform committee

September 14, 2018 | By | Reply More

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PETALING JAYA: Former director-general of the Inland Revenue Board(IRB) Tan Sri Hasmah
Abdullah, has been appointed as the chairperson of the Tax Reform Committee(TRC) which is tasked to conduct a comprehensive study on the Malaysian taxation system and come up with a holistic solution to diversify the government’s revenue streams through taxation.

Bringing onboard 37 years of experience in tax administration, Hasmah has served as IRB’s director-general for five years.

Finance Minister Lim Guan Eng said in a statement that Hasmah will be joined by tax experts, Dr Verinderjeet Singh, Datuk Chua Tia Guan and Amardeep Singh in the committee.

Additionally, the Finance Ministry will be represented in the committee by tax department secretary Datuk Khodijah Abdullah, tax department deputy secretary Mohd Sakeri Abdul Kadir and fiscal and economic department deputy secretary Mohd Hassan Ahmad.

Lim noted that given the narrowed tax base after the goods and services tax (GST) was scrapped which in turn has reduced the government’s revenue by RM23billion, thus it is necessary to find new ways to raise tax collection progressively without affecting the Bottom 40(B40) group negatively.

The gap in revenue collection must be addressed as it could prevent the federal government from carrying out its social and developmental mandate—given that it has already discontinued and deferred several costly infrastructure projects due to revenue constraints, while also implementing wider open tender system to control its expenditure.

In that light, a comprehensive study is required to make it more efficient, neutral and progressive, as well as capable of generating high-quality growth in order to raise the well-being of the people.

The committee’s main objective includes addressing tax leakages, reducing the existing tax gap, exploring new sources of revenue, studying the taxation in the digital economy and reviewing the effectiveness of various tax incentives as provided by the law.

“Since the federal government is not planning to increase the corporate and individual tax rate, the federal government is taking a holistic approach in reforming its taxation system in order to address this matter,” he said.

The TRC will be tasked at broadening and diversifying the federal government’s tax revenue without placing additional burden on the people, as well as to minimise tax leakages,” he added.

The federal government will also strengthen its enforcement and compliance measures against fraud, tax evasion and the smuggling of controlled items which contributes to the loss of revenue.

“Greater focus will be accorded on material cases of tax evasion, particularly on companies that are abusing transfer pricing and tax planning activities. Fighting all networks engaged in smuggling activities and tax evasion requires joint efforts between the authorities within and outside Malaysia,” he said

Malaysia faces revenue loss due to direct smuggling of contraband goods and indirect smuggling where some exporters make false declarations or produce fake invoices.

Smuggling activities are usually facilitated by shipping, forwarding and transport agents. Hence, streamlining and strengthening enforcement actions are keys to combat such activities both at the land and sea borders.

For this purpose, the government will deepen cooperation between the various domestic and foreign authorities.

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