Ex-IRB DG Hasmah Abdullah named chairperson of Tax Reform Committee
KUALA LUMPUR: Former Inland Revenue Board (IRB) Director-General Tan Sri Hasmah Abdullah has been appointed as the Chairperson of the newly established Tax Reform Committee, which will look into reducing the existing tax gap, addressing tax leakage, as well as exploring new sources of revenue.
It will also study the taxation of the digital economy and review the effectiveness of various tax incentives as provided by the law, Finance Minister Lim Guan Eng said yesterday.
The committee is joined by finance and tax experts, namely Dr Verinderjeet Singh, Datuk Chua Tia Guan and Amardeep Singh, he said in a statement here.
Meanwhile, Tax Department Secretary Datuk Khodijah Abdullah, Tax Department Deputy Secretary Mohd Sakeri Abdul Kadir and Fiscal and Economic Department Deputy Secretary Mohd Hassan Ahmad represent the Ministry of Finance (MoF).
All the appointments were effective Sept 12, 2018. The committee convened its first meeting on the same day.
Lim said the government would ensure that it has sufficient and stable revenue sources to meet all of its future obligations and to safeguard its fiscal sustainability, while fulfilling the aspirations of the rakyat.
“The gap in revenue collection must be addressed as it could prevent the Federal Government from carrying out its social and developmental mandate,” he said.
The Pakatan Harapanled Federal Government has successfully abolished the Goods and Services Tax (GST) and replaced it with Sales and Services Tax (SST) as promised.
These measures will reduce tax collection by RM23 billion in 2019.
So far, the Federal Government has discontinued and deferred several costly infrastructure projects due to revenue constraints, while implementing a wider open tender system to control its expenditure.
Since the Federal Government is not planning to increase the corporate and individual tax rate, it is taking a holistic approach in reforming its taxation system in order to address this matter, he said.
The Tax Reform Committee will be tasked with broadening and diversifying the Federal Government’s tax revenue without placing additional burden on the rakyat, as well as to minimise tax leakages.
“Any new tax under consideration must be efficient, neutral and progressive to promote long-term sustainability, productivity, and economic growth. If implemented properly, any tax measures can be more targeted and more progressive.”
Most of these tax measures are already being pursued by developed and neighbouring countries.
More importantly, these tax measures should not add further burden to the lower income group.
Apart from that, the Federal Government will strengthen its enforcement and compliance measures against fraud, tax evasion and the smuggling of controlled items that contribute to the loss of revenue.
“Malaysia faces revenue loss due to direct smuggling of contraband goods and indirect smuggling where some exporters make false declarations or produce fake invoices,” he said.
These are usually facilitated by shipping, forwarding and transport agents.
“Streamlining and strengthening enforcement actions are the keys in combating smuggling activities at our land and sea borders,” he pointed out.
Greater focus will be accorded on material cases of tax evasion, particularly on companies that are abusing transfer pricing and tax planning activities.
“Fighting all networks engaged in smuggling activities and tax evasion requires joint efforts between the authorities within and outside Malaysia. To do so, the Federal Government will deepen cooperation between the various domestic and foreign authorities,” he added. — Bernama