Stiff penalties for SST dodgers
Revised laws bring fine and jail time for evaders or false claimants
KUALA LUMPUR: The Sales and Service Tax is coming back with more bite. The reintroduction of the SST in September will not merely be a revival of familiar laws. For one thing, tax dodgers will face stiffer penalties, including heftier fines and longer jail terms.
According to the Sales Tax Bill 2018, any person who evades the tax or assists someone in not paying the tax risks being fined between 10 times and 20 times the amount of sales tax. If found guilty, he can also be imprisoned for up to five years, or worse, he can be sentenced to both penalties.
If he commits the offence again, the individual faces a fine of not less than 20 times and not more than 40 times the amount of sales tax, or a jail term of up to seven years, or both.
However, Section 86(3) of the Bill states that if the amount of the sales tax cannot be determined, then the person will be fined between RM50,000 and RM500,000 or be given a jail term not exceeding seven years, or both.
These penalties are harsher than those spelt out in the Sales Tax Act 1972, which was repealed to make way for the Goods and Services Tax.
For example, under Section 43A of the defunct Act, a person convicted of willfully evading tax or assisting anyone to evade tax, was liable to a fine not exceeding RM50,000, or up to three years’ jail, or both.
This provision applied if the person provided false information, made false claims or omitted certain information in the tax returns.
There was also a lighter penalty, under Section 44 of the Sales Tax Act 1972, of a maximum fine of RM5,000, up to 12 months in jail, or both, if a person was found guilty of abetting or assisting a tax evader.
The new laws for SST are also tough on those who knowingly help with the paperwork that leads to tax evasion.
According to the Sales Tax Bill, it is an offence to assist or advise in the preparation of tax returns that results in another person evading sales tax.
If found guilty, an individual is liable to a fine of between RM2,000 and RM20,000 or imprisonment for up to three years, or both.
However, the person may escape punishment if the court is satisfied that the assistance or advice was given with reasonable care.
It is also proposed that anyone providing incorrect information related to sales tax could face a maximum fine of RM50,000 or a jail term not more than three years or both, if found guilty.
A person who “obstructs, assaults, or hinders” a tax officer from carrying out his duties may face a fine of not more than RM100,000, a maximum jail term of five years, or both.
Those responsible for managing a company’s affairs (such as directors, compliance officers, partners, managers or secretaries) could also face a fine of up to RM30,000, a jail term not more than two years, or both, if found guilty of offences under the proposed law.
A similar set of punishments is also proposed under the Services Tax Bill 2018 for those who evade this tax or commit other offences under the proposed law. These penalties are also considerably heavier than those in the repealed Service Tax Act 1975.
Apart from these two Bills, the Goods and Services Tax (Repeal) Bill 2018, Customs (Amendment) Bill 2018 and the Free Zones (Amendment) Bill 2018 were also tabled for the first reading by Deputy Finance Minister Datuk Amiruddin Hamzah yesterday.
The Bills pave the way for the abolition of the GST and implementation of the SST on Sept 1. Abolishing the GST system, which came into force on April 1, 2015, is one of the key promises in Pakatan Harapan’s election manifesto.
The Bills do not mention the SST rates but Putrajaya has indicated that it intends to introduce a 10% sales tax and 6% service tax.
The Customs (Amendment) Bill is described as “principally consequential” to the implementation of the SST system. The main proposed changes relate to the membership of the Customs Appeal Tribunal and its proceedings.