PETALING JAYA: The Small and Medium Enterprises Association of Malaysia (Samenta) has come out in support of the proposal by Member of Parliament for Bagan and former finance minister Lim Guan Eng for the formation of a tax tribunal.
Samenta national president Datuk William Ng said as Malaysia moves into the full implementation of e-invoicing and stricter compliance under the Madani Economy, their members are reporting a surge in aggressive tax audits.
“This places undue pressure on SMEs who are already struggling with tight liquidity and rising operational costs amidst the ‘compliance economy’,,” he said in a statement today.
The current dispute resolution mechanism is manifestly insufficient, costly and time-consuming for all parties, said Ng.
“It forces poorly equipped SMEs to defend themselves against powerful, well-resourced agencies. It is not a fair fight, and the presumption of guilt has no place in a modern democracy,” he emphasised.
To ensure the proposed tribunal truly serves the 1.2 million MSMEs in Malaysia, he said, Samenta proposes for a unified income tax and customs tribunal as, currently, SMEs are forced to navigate two legal channels: the Special Commissioners of Income Tax and the Customs Appeal Tribunal.
“We propose a single, unified body to handle both direct and indirect tax disputes. An SME should not have to fight two different government agencies using two different sets of lawyers for the same business period.”
Samenta also proposed a mandatory binding arbitration for small claims as for disputes involving sums below RM100,000, the tribunal’s decision must be final and binding on both the taxpayer and the Inland Revenue Board (IRB) or the Customs.
“SMEs cannot afford years of ‘wars of attrition’ in the high courts. By making the tribunal’s decision binding for smaller sums, we provide SMEs with finality and prevent the government from using its vast resources to outspend SME owners in court.”
Ng said Samenta also proposed an automatic “stay of collection” within 30 days as the current “Pay First, Dispute Later” policy (Section 103 of the Income Tax Act) is a relic that is killing businesses.
“We propose that the collection of additional taxes and penalties be automatically suspended the moment a notice of appeal is filed with the tribunal, provided it is done within 30 days of the assessment. We must stop ‘tax-induced bankruptcies’ where SMEs are forced to close because their working capital are seized for assessments that are later proven incorrect.”
Samenta also called for the removal of legal jargon as the tribunal must be a “forum of fact” not a “forum of technicalities”.
“We propose that arguments be presented in plain language, free from the legal jargon that disadvantages SMEs who cannot afford tax agents or lawyers. The tribunal should judge cases based on commercial reality and accounting records, ensuring that a business owner can defend their case without needing a law degree.”
Ng said taxation should be a contribution to nation-building, not a source of “administrative terror” and bullying.
Samenta urged the government to establish the proposed tax tribunal and to include industry representatives to ensure it reflects on-the-ground reality of doing business.
“Our stand is that businesses must and should pay taxes, and there should be no room for tax evasion. On the flip side, SMEs must be given a fair opportunity to dispute findings that they believe are unjust,” Ng said.
He added: “We are ready to work with the Finance Ministry to turn this proposal into a reality that protects our wealth creators, encourages entrepreneurship, and ensures Malaysia remain a destination of choice for businesses and investors.”
