Tax Matters – Four more days to seize Self Voluntary Declaration Programme opportunity

THE Self Voluntary Declaration Programme (SVDP) by the Inland Revenue Board (IRB) and the Royal Malaysian Customs Department (RMCD) is an amnesty programme that allows taxpayers to come clean and declare either undeclared or underdeclared income without any additional penalties.

The programme comes to an end on Friday (May 31). Time is extremely short for taxpayers who have not participated in the programme but are aware that there may be shortfalls in their past declarations.

The SVDP for income tax, real property gains tax and stamp duty purposes can be done for all the years up to the year of assessment 2021. The RMCD’s SVDP is only allowed for sales and service tax (both pre-2015 and post-2018), and goods and services tax (from 2015 to 2018). The Customs Department’s SVDP is available for sales and service tax taxable periods up to February 2023. Customs duties and excise duties are not covered.

What should you do?

All taxpayers are allowed to participate. As far as individuals are concerned, it would be an opportune time to review the claims for reliefs and deductions made in the past years and whether you are able to support these claims with the relevant documentation. The individuals should also be reviewing their tax situation to recollect miscellaneous income such as commissions received or fees received for providing services or income received from ad-hoc speeches, events, etc. If you do not have the supporting documentation or you have not declared these ad-hoc miscellaneous income, it is time to declare this income.

Other taxpayers, particularly corporate taxpayers, should quickly look at their accounts in the event there has been an underdeclaration of income or overclaiming of expenditure, or have taken positions which are debatable. It is an opportunity here to use the SVDP to declare the understatement and avoid lengthy audits in the future.

If you have indulged in any of the practices that have either underdeclared your income such as through an overstatement of stocks at the year-end, buying fictitious invoices, claiming non existent expenditures, or taking a deduction for payment of bribes, etc. It is now an opportunity to come out in the open and pay the additional tax without any penalties and benefit from the late payment of taxes.

It is very common for directors and officials working in a company to inadvertently miss out in declaring the benefits and perquisites that they are receiving from the company. It is useful to get this situation corrected during the SVDP.

The RMCD’s SVDP requires you to submit the declaration based on the returns for the taxable periods for sales tax, service tax, or goods and services tax. The kind of underdeclaration here could include the non-declaration of imported services tax, wrong use of exemptions, exemption conditions not being complied with, wrongly claiming exemptions, business-to-business relief or group relief, etc.

Please declare the correct amount

It is important that your declaration is complete and supported with the proper workings and documentation, because in the event the tax authorities want to understand the amounts declared, you should be able to explain. It is unlikely that they will come back as they have stated that they will take your declaration in good faith. However, in the event the declaration is fraudulent, you cannot rule out the possibility of the IRB or the RMCD opening your case for a full investigation.

However, the IRB or the RMCD must have solid evidence to reopen any SVDP case. It will be extremely rare for the IRB or the RMCD to reopen SVDP cases. This has been evidenced from the IRB’s SVDP in 2019.

Although four days to enter the SVDP is an extremely short time, it can be done.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (