TITLE: Speech by YBhg. Dato’ Sri Sabin bin Samitah, Chief Executive Officer, Inland Revenue Board of Malaysia at the Malaysian Tax Conference 2019

DATE: 03/04/2019








Assalamualaikum warahmatullahiwabarakatuh and a very good morning

Mr. Salihin Abang
Malaysian Institute of Accountants

Yang Berbahagia Dato’ Haji Abd Aziz Abu Bakar
Malaysian Association of Tax Accountants

Guest speakers

Members of the Media

Ladies and gentlemen

A. Opening Remarks

  1. I am glad to be here this morning to deliver my keynote address for the Malaysian Tax Conference 2019, jointly organised by the Malaysian Institute of Accountants, MIA, and the Malaysian Association of Tax Accountants, MATA.
  2. Thank you to the organisers for once again inviting me to speak at the conference, my second as the head of the Inland Revenue Board of Malaysia (IRBM).
  3. I would like to take this opportunity to congratulate both MIA and MATA in organising another successful event with an impressive line-up of speakers, including a few from IRBM.
  4. I am happy to welcome the 400 attendees comprising of tax practitioners, tax managers, tax agents, chief financial officers, finance directors, heads of finance department and accountants to this two-day conference.

B. Direct Tax Collection 2018 and 2019 Target

Ladies and gentlemen,

  1. We at IRBM have the huge responsibility to collect direct taxes. Our collection of direct taxes contributes towards the government’s ability to maintain a stable economy and avoid reliance on outside sources for funding.
  2. As announced by the Finance Minister earlier this year, IRBM outperformed expectations when we managed to collect direct tax of RM137.035 billion, an increase of 11.13 percent or RM13.723 billion compared to the amount collected in 2017.
  3. It also deserves to be mentioned that IRBMs performance throughout the years has always reflected a positive correlation to the country’s gross domestic product (GDP).
  4. And for 2019, we have been entrusted to deliver RM147 billion to the government, in order for the government machinery to operate in an effective manner. I am happy to note that we are on track in terms of delivering the target set, and will work towards meeting it by the end of the year.

C. Tax Reform in Malaysia – The Journey and the Future

Ladies and gentlemen,

  1. A good tax system and an appropriate administration of taxes are pre-conditions for adequate functioning of a country and the provision of public goods. Everyone benefits from this.
  2. An efficient tax system encourages good behaviour. Good behaviour improves compliance. Improved compliance means greater tax revenues. And greater tax revenues mean we can reform taxes in a way that can make our tax system more efficient.
  3. We all want a simpler code, but tax reform is about much more than that. It is about ensuring that everyone pays their fair share.
  4. And herein lies the vital role of the Tax Reform Committee or TRC, set up by the government on 12th September 2018. The committee has been instrumental in drawing up plans and reviewing the overall tax system of the country, to ensure it meets the elements of fairness and equity.
  5. The main objectives of the TRC are to address tax leakages, reduce the existing tax gap, explore new sources of revenue, study the taxation of the digital economy and review the effectiveness of various tax incentives as provided by the law.
  6. I would therefore like to put on record IRBMs appreciation to TRC, for actively engaging IRBM in discussions held and providing us the opportunity to contribute towards reforming the tax system.
  7. IRBM also thanks the committee for proposals made to the government with regard to taxation, as was tabled during the 2019 Budget in November 2018.
  8. Several measures were proposed, however, I will highlight two (2) measures announced which was the launch of the Special Voluntary Disclosure Programme, or SVDP, as well as the auditing and investigation of unexplained extraordinary wealth.

D. Special Voluntary Disclosure Programme

Ladies and gentlemen,

  1. The first phase of the SVDP offering a reduced penalty rate of 10 percent ended three (3) days ago. We have now entered the second phase of the programme.
  2. A lot of attention has been centered on the SVDP for the past five (5) months. In fact, I spoke at MIA’s seminar on 17th January 2019 on the SVDP.
  3. I will therefore not be dwelling further into the mechanisms of the SVDP. Rather, I would like to repeat that the SVDP provides an avenue for those with overseas bank accounts to come clean on their tax affairs with regard to those accounts, especially if the income derived is from Malaysia, and has yet to be reported for tax purposes.
  4. For the rest of the taxpayers, SVDP provides an opportunity for you to clear any outstanding tax issues that may still be pending, especially unreported, or under-declared, in the past.
  5. You still have until the end of June to take full advantage of this one-off initiative offered by the government, before the existing penalty regime comes into force.
  6. I am happy to note many have come forward during the first five (5) months, as this shows their willingness to comply with the tax law in place.

E. IRBM – Reforming Through Strategies

Ladies and gentlemen,

  1. Tax reform should not always be associated with new taxes or new tax laws. It has a broader spectrum, with the end result being increased voluntary tax compliance.
  2. Designing and implementing compliance strategies is, therefore, never an easy task. There is never one strategy that will be able to touch all segments of the taxpaying population. This “no one size fits all” scenario is due to various factors, such as the complexity of the tax system and varying service delivery expectations, to name but a few.
  3. However, we shall continue to strive to provide only the best for all our stakeholders, in order to facilitate and not frustrate you in fulfilling your tax obligations. We probably won’t succeed in making people enjoy paying their taxes, but we can at least succeed in making the whole process easier.
  4. We, at IRBM, will always work towards providing a level playing field to all taxpayers, and to do this, we must first instil in us, respect for the tax system.
  5. Compliance is an issue and a challenge to all tax authorities, IRBM being no exception. Even with sufficient provisions in the tax act on record keeping, tax filing and tax payment, issues in compliance still arise.
  6. One of the major issues under the filing of income tax return forms, is non-filing and incomplete returns. Providing incorrect information, under-declaring income and over-claiming reliefs remain areas that need further compliance by all taxpayers even after almost two decades into the self-assessment regime.
  7. Complying with record keeping provisions, falsifying documents and manipulations of accounts are amongst areas of grave concern. Abusing incentives and allowances too are areas which need more attention in order to prevent further abuse.
  8. For payment of tax, taxpayers still fail to, in either paying, or not paying the right amount. Complying with payment schedules and providing the right estimate of tax payable remain issues that need to be tackled.
  9. Therefore, IRBM has put in place strategies that tackle the different groups of taxpayers based on their compliance level.
  10. For taxpayers who are willing to do the right thing, IRBM will continue to ensure that filing and paying taxes remains easy.
  11. We have and will continue to open more Revenue Service Centres (RSC) throughout the country. The purpose of these RSCs is to ease and increase accessibility for the public to deal with LHDNM.
  12. In fact, counters were made available on the weekend before the end of phase one (1) of the SVDP, in a move to facilitate taxpayers to come forward.
  13. Other than increasing accessibility, IRBM introduced the e-filing facility for companies in 2004 and for individuals in 2005. There have been constant changes and improvements made to the system, to make it simpler and friendlier to use, without compromising on the security aspect of the system.
  14. Over the years, we have strived to not only make the submission of return forms easy, but to equally make the payment process as simple as possible. We have the online payment service available which is further complimented by payment of taxes through credit cards.
  15. There are numerous other online facilities you may log on to without having to leave the comfort of your home or office.
  16. To further complement tax education programmes, there is a specific unit in all IRBM branches which provides assistance and technical advice to small businesses. The main aim of this unit is to assist business in tax related matters such as record keeping and tax filing.
  17. Although compliance strategies are mostly designed for existing taxpayers, IRBM cannot discount the importance of tax education programmes for the future generation. Awareness has to start at an early stage, by inculcating the importance of taxes in all levels of the population.
  18. To this end, we have tailor-made tax education and awareness programmes for the young, which include:
    1. Setting up of a tax office in KidZania Kuala Lumpur; and
    2. Annual tax camps for students from secondary schools.
  19. Moving forward, we will be launching our live-chat facility, allowing for a virtual interactive mode of communication.

Ladies and gentlemen,

  1. Taxes require a carrot-and-stick approach, lest some forget the responsibility they need to shoulder.
  2. For most tax authorities, audits are an important means of determining broader compliance levels and shaping compliance. As well as validating compliance in individual cases, audits play a deterrent role.
  3. Be rest assured that IRBM sees audits as a means of educating these group of people who do not comply and IRBM fully adheres to the audit framework in place.
  4. In fact, we have taken a stand to further reduce disruptions caused to taxpayers by focusing on desk audits and limiting the time-frame of audits to two (2) years of assessment, unless there is an issue of willful evasion or avoidance.
  5. Those that have fully decided to not comply with the existing tax laws, IRBM will not hesitate in using full force of the law, in order to uphold the integrity and fairness of the tax system.
  6. If at one hand, we, IRBM, pledge to make fulfilling tax obligations an easy task, on the flip side, IRBM will show no fear or favour in bringing individuals involved in tax crimes to justice.

Ladies and gentlemen,

  1. The changing outlook in the international tax arena requires IRBM to be adaptive to this change. With the existence of creative practices in evading and avoiding taxes, there is a need to not only protect the tax revenue of the country, but also to combat any tax crime at the international level.
  2. Being a member of the OECD Global Forum allows IRBM to be abreast with the latest developments at the international front, making it easier to design tax laws and policies which move along this evolvement.
  3. With data readily available through the implementation of the Automatic Exchange of Information (AEOI), makes it easier for IRBM to draw up strategies to cater for the differing taxpaying group.
  4. In fact, IRBM is in the midst of developing an IT platform, known as Transformasi Hasil, which is a data driven integrated system that will change the work process of IRBM.

F. Role of Tax Fraternity

Ladies and gentlemen,

  1. We hope that by improving the tax system, we can sharpen Malaysia’s global competitiveness as a desirable investment and business destination.
  2. We did well in 2018; Malaysia advanced nine places to the 15th spot among 190 economies worldwide in the World Bank’s Doing Business 2019 Report. The rankings are based on business regulations and ease of doing business, of which tax is an area mentioned.
  3. However, in order for us to further improve, we need the buy in of all our stakeholders – the taxpayers, the public and you, the tax fraternity.
  4. We believe that it is essential that tax practitioners are vocal in recognising tax compliance as a civic responsibility, encouraging your peers to do likewise and promoting by example and by attitude the notion of tax responsibility.
  5. We are really encouraged by the extent to which this is beginning to happen in this country. We are not by the way trying in any way to hand over the tasks and responsibilities of IRBM to you.
  6. But it must be clear that IRBM would have real difficulty imposing tax compliance on an unwilling and resistant community. Our objectives cannot be achieved without your visible commitment and support.
  7. Whatever initiatives we introduce, the IRBM is pleased to count on MIA as the regulator of the profession and MATA for your support and collaboration in building a business-friendly tax ecosystem in Malaysia.
  8. MIA as the regulator of the accountancy profession is instrumental to the development of a more efficient tax ecosystem and supporting better business.
  9. One area where MIA plays an important role is in aligning tax, accounting and financial reporting standards. Divergence can be very costly and inefficient as taxpayers have to manage different standards, different processes and different sets of documentation.
  10. Through alignment, we can simplify the tax system for the benefit of all stakeholders, to make documentation, processes and doing business much easier.
  11. IRBM also congratulates MIA as the regulator of the accountancy profession on its progress in combating bogus accountants in the country. This is a very important initiative as the practice of unqualified accountants does have an adverse impact on the country in collecting the right amount of tax from businesses and individuals, resulting loss of income to the government.
  12. On this note I assure you that the IRBM will continue to work closely with MIA in providing the required support in combating these bogus accountants.

G. Closing

Ladies and gentlemen,

  1. The Malaysian Tax Conference 2019 has a line-up of very experienced and knowledgeable speakers. This two-day conference will prove to be a thought-provoking and interesting platform to deliberate on tax issues.
  2. Do take the opportunity to actively engage in the sessions planned, and take time out to strengthen existing ties and forge new networking.
  3. Before I end, I would like to congratulate the team for the organising of the conference. Your commitment and dedication is evident through the numbers present today.
  4. I once again thank MIA and MATA for extending the invitation to me to deliver the keynote address.
  5. A gentle reminder before ending, as we are now in the 2019 filing season, please remember the relevant filing dates, 30th April 2019 for Form BE and 30th June 2019 for Form B. I thank you in advance for fulfilling your tax responsibility.
  6. With that, I hereby officiate the Malaysian Tax Conference 2019.

Thank you!