PETALING JAYA, Dec 10 (Sin Chew Daily) — The Inland Revenue Board is no longer required to inform taxpayers when it requests the latter’s bank account details from the bank to conduct review or investigation, according to the latest amendment of Section 106A of the Income Tax Act.
Tax expert Koong Lin Loong told Sin Chew Daily that in the past, taxpayers were to sign a consent form before banks were allowed to furnish the bank account information to the authorities.
However, with the inclusion of the proposed section, the authorities will be allowed to request from the bank directly. The bank is not allowed to disclose such request to any person.
Section 106A is one of the proposed amendments listed in the Finance 2021 bill which has been tabled for first reading in Dewan Rakyat.
Koong said the Personal Data Protection Act (PDPA) would no longer be applicable with the enforcement of section 106A in future.
According to PDPA, banks are to acquire the taxpayers’ consent before furnishing the bank account details to IRB.
The proposed Section 106A also states that if the IRB charges a taxpayer in court, IRB is allowed to request for taxpayers’ bank account details once a detention order is issued.
In addition, the bank is not allowed to inform the taxpayers.
“The authorities can also request for taxpayers’ information from association to check whether income tax was filed from the angle of donations,’’ he said.
It is estimated that tax evasion amounts to a whopping RM300 billion each year. The estimate is believed to be 18% of the country’s gross domestic product.
Koong said Malaysia had signed agreements with 150 countries on automatic exchange of information. Malaysia is also participating in the Organization for Economic Co-operation and Development (OECD) to comply with the international requirement on tax planning.
Datuk Chua Tia Guan, Head of Tax & Financial Consulting from Asia Business Center Malaysia said when the IRB fails to collect tax arrears from a taxpayer, it is entitled to seize the taxpayer’s assets, including savings in the banks once it is granted a court order.
He told Sin Chew Daily that the new requirement allows IRB to have direct access to taxpayers’ bank accounts and prohibit the banks from informing the taxpayers.
“The Section states that banks are liable to a fine of between RM200 and RM20,000 or a maximum jail of six months or both for violation,’’ he said.
According to Income Tax (Exchange of Information) Rules 2021 which was gazetted on December 1, banks do not need to inform the taxpayers when the authorities request them to furnish the bank account information.
According to the Convention on Mutual Administrative Assistance in Tax Matters, foreign governments are allowed to request for their taxpayers’ information in Malaysia.
Chua said the Malaysian government could also seek Malaysians’ wealth information in foreign countries.
Since 2016, Malaysia has exchanged information with more than 100 countries automatically, and can receive information on Malaysian citizens’ wealth status overseas on a regular basis.