APRIL 23 — Tax investigation is a more detailed form of examination of books, documents relating to the taxpayers which includes visiting of taxpayer’s business premises or residential property. The investigation is carried out to determine the correct amount of tax is declared and paid in accordance to the prevailing laws and regulations. Generally, tax investigation will be carried out when there is a suspicion of fraud, tax evasion and wilful evasion.
IRB office will issue prior notice to the taxpayers before visiting the premises or residential homes. There are instances whereby IRB officers make an unannounced visitation to taxpayers’ premises. Introduction has to be made upon arrival at the premise of the taxpayers by the Inland Revenue Board’s officers and identity can be confirmed with the presence of the authority card bearing his name and photograph.
The responsibilities of taxpayers include allowing the IRB officers with unrestricted access to buildings and documents and to allow the IRB officers to make copies of the documents in possession. IRB officers can seize and take possession of relevant documents from the premise. The taxpayers are also required to prepare and submit the Capital Statement and Annual Expenses Statement.
If the taxpayers find it too much hassle to handle the tax investigation, he can appoint licensed tax agent under the Ministry of Finance (MOF) with sound knowledge and professional in dealings. The tax agent acts as a median and advise taxpayers within the provision of law.
Once the tax investigation procedures are completed, IRBM will issue a letter to the taxpayer confirming the finalization of the investigation. If a settlement is mutually agreed, an agreement or letter of undertaking will be signed. The investigation is considered finalised once it is approved by the Director General Inland Revenue (DGIR) and an assessment is raised.
The tax and penalties due have to be made to the Inland Revenue Board office based on the assessment raised in one lump sum. However, the taxpayer can submit application for instalments to settle the outstanding amount. There is a minimum of 25 per cent upfront payment requirement if taxpayers opt for instalment scheme. The balance 75 per cent of taxes due shall be paid within the prescribed instalment scheme. All the post-dated cheques on the instalment scheme has to be submitted along with the signed agreement or letter of undertaking.
On the other hand, if the taxpayer is not agreeable to the tax investigation findings, the taxpayer can appeal by submitting Form Q to the Director General of the relevant branch handling the tax investigation. Further appeal can be done to Special Commissioners of Income Tax (SCIT) within 30 days after being served with notice of assessment. If either party is still dissatisfied with the decision of SCIT, the aggrieved party can appeal to the higher court.
The serious offences under the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA) includes failure to furnish income tax return form, make incorrect return and wilful evasion. The investigation cases of money laundering usually relate to serious offences such criminal breach of trust and theft. Upon conviction of money laundering, a person shall be liable to imprisonment of 15 years or less and a fine of not less than five times the sum or value of proceeds of an unlawful activity OR RM5 million, whichever is higher.
Conclusion
In a nutshell, do let the documents speak for itself. Taxpayers are advised to be professional, courteous and treat IRB officers with respect. A key point is not to delay in providing the documents as the IRB officer can raise an assessment based on best judgement. Under a normal circumstance, it is always a civil case which means it is all about how much tax is due payable based on the tax investigation findings.
Taxpayers has the right to appeal and defend their computation if they are disagreeable with IRB findings. Mitigation should always be based on documents within the provision of law. However, taxpayers are encouraged to apply for an extension of time when unable to furnish documents in time.
Taxpayers should also understand what a Capital Statement is as it is a core document requested by the Inland Revenue Board office during a tax investigation case. If taxpayer is unable to prepare one, you can appoint a licenced and qualified tax agent to advise you.
*Datuk Harjit Singh Sidhu, CEO of HSS Advisory Sdn Bhd with more than 30 years of working field of Taxation, mainly in Tax Audit and Investigation and Tax Advisory. He is a regular speaker on taxation matter, tax advisory, planning and audit investigation. He is also a licensed tax agent with the Ministry of Finance (MOF). You can reach out to him at [email protected].
**This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.
