Tax and GST News – November (2)

12-18 November

Digital tax may boost tax collection by 5%, 17 November 2017

KPMG Tax Services Sdn Bhd said that Malaysia’s plan to impose indirect tax on companies in the digital economy, especially cross-border e-commerce and service firms, could increase tax collection by 3% to 5%, as it will affect consumers and suppliers throughout the entire value chain. However, this estimate is subject to change, depending on the Royal Malaysian Customs Department (RMCD)’s plan.

Ng Sue Lynn of KPMG Tax Services Sdn Bhd highlighted that one of the challenges for the implementation is to ensure that the tax process is simple and promotes compliance. She said that a proper study should be conducted on the operational, legal and financial possible impact as well as getting foreign service providers to register with the government.

Asia Internet Coalition (AIC), an industry association founded by Google and eBay, said that it is important for the government to engage with the industry when implementing new tax laws to ensure that the laws are simple and do not negatively impact the growth of digital and low-value tangible goods e-commerce trade.

Source: The Edge Markets, 13 November 2017

MoF scrutinising companies shut down after GST implementation, 17 November 2017

The Ministry of Finance (MoF) is investigating why some businesses have ceased operations after the GST implementation and whether it is due to such implementation.

Second Finance Minister Johari Abdul Ghani said that the MoF has received reports that several businesses have ceased operations to avoid being detected for tax evasion under the sales and service tax (SST) regime. These companies would have paid SST at a certain sum but with the GST implementation, it would have forced these companies declare the actual amount of their revenue. These companies were then closed down and the assets were transferred to a new company so that they can start afresh.

Source: Free Malaysia Today, 13 November 2017

RMCD encourages companies to rectify returns before January 2018, 17 November 2017

The Royal Malaysian Customs Department (RMCD) Director-General Datuk Seri T. Subromaniam is encouraging companies to re-submit their returns with the correct amounts before an operation is launched in January to take action against those who have submitted incorrect returns. He acknowledged that some erroneous claims may have occurred due to confusion about regulations and human errors, which is why the operation to track down the offenders will only happen the following year, to allow the companies to re-submit their tax returns.

The government has lost more than RM100m in revenue due to fraudulent GST claims, according to Subromaniam.

Source: Malay Mail Online, 13 November 2017

GST exemption on big ticket items applies to commercial acquisitions, 17 November 2017

The GST exemption on the acquisition of big ticket items will not include the acquisition of private jets and yachts, said Finance Minister II Datuk Johari Abdul Ghani. He said that the exemption will apply to commercial jets as well as oil and gas floating storage and vessels as these investments have a significant impact on the economy.

Source:Malay Mail Online, 13 November 2017

IRB and RMCD signs MoU to enhance strategic pact, 22 November 2017

The Inland Revenue Board (IRB) and Royal Malaysian Customs Department (RMCD), on 16 November 2017, signed a memorandum of understanding (MoU) which will enable the exchange of information and the sharing of intelligence to further strengthen and ensure effectiveness in the collection of taxes.

The MoU will allow the RCMD to obtain forms [eg, individual income tax returns (Form B, Form BT and Form M), corporate income tax returns (Form C), withholding tax returns and real property gains tax returns] from the IRB. In return, the IRB will be able to obtain specific information contained in the Form GST-01, Form GST-03 and Form GST-04). The information will be used to assist in data matching and analysis for the identification of taxpayers and selection of tax and audit investigation cases, and also increase tax compliance.

The CEO of the IRB informed that up to 30 September 2017, the IRB has solved 17,454 cases that has led to a tax collection of RM789,851. The Director-General of RMCD informed that up to October 2017, his Department has solved 7,537 files that led to a GST and import duty collection involving RM695,788.

Kindly visit the IRB website for further details.

Source: IRB website, 16 November 2017

KPMG: Government’s focus on review and extension of tax incentives, 22 November 2017

Tax incentives announced under the recent budgets are declining, with the government focusing on extending existing incentives, said Tai Lai Kok of KPMG Tax Services Sdn Bhd. He pointed out that the incentives are becoming more targeted with a limited lifespan as this would allow the government to revisit the incentives to determine their relevance.

Source: Borneo Post Online, 17 November 2017

Taxman imposes RM75m tax and penalty on SP Setia unit, 22 November 2017

The Inland Revenue Board (IRB) has served a notice of additional assessment amounting to RM75.38m to SP Setia Bandar Setia Alam Sdn Bhd, a subsidiary of SP Setia Bhd. The amount consists of RM51.98m of income tax over five YAs and a penalty of RM23.39m.

The IRB has taken the view that the gains arising from the disposal of land properties held as investment properties are chargeable to income tax under the Income Tax Act 1967 instead of the Real Property Gains Tax Act 1976.

The group will contest the additional assessment and penalty on grounds that the sale of investment properties are capital transactions that fall under the Real Property Gains Tax Act 1976.

Source: The Star Online, 17 November 2017


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