The Inland Revenue Board of Malaysia ("IRBM") introduced the Special Program for Voluntary Disclosure ("SPVD") to encourage taxpayers to voluntary disclose underdeclared income, overclaimed expenses, reliefs, deductions and rebates.
Due to an overwhelming response of voluntary disclosure from taxpayers, the IRBM has extended the SPVD period by three months with the following corresponding penalty rates:
- For disclosures made between November 1, 2018 to June 30, 2019: 10% (former rate of 15% from March 1, 2019 onwards)
- For disclosures made between July 1, 2019 to September 30, 2019: 15%
- After the SPVD period ends: between 45% to 100% (former rates between 80% to 300%)
It is important to note that taxpayers who have made voluntary disclosures through the SPVD for the year of assessment 2017 (accounting period ending in 2017) and prior year of assessment, IRBM will accept the information received in good faith and will not be subjected to audit or investigation for the period in which the declaration was made. However, the computation of tax will be checked to ensure the accuracy of the voluntary disclosure made.
The SPVD implementation period also applies to voluntary disclosures for transfer pricing issues which are subject to the Transfer Pricing Audit Framework dated April 1, 2013 ("TPAF"). Despite declaring that no audit or investigation will be carried out in the future for the SPVD, a minimum audit process will be carried out upon the voluntary disclosure for transfer pricing issues, provided that comprehensive Transfer Pricing Documentation has been submitted during the SPVD and the auditor is satisfied with the information provided. The penalty rates for transfer pricing issues are expected to be increased effective October 1, 2019, post the SPVD period.
Taxpayers should undertake a comprehensive review of their tax obligations and appropriate measures to evaluate if there have been any reporting gaps in the past, which would require immediate action and disclosure before considering the SPVD.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.