Govt aims to cut nation’s uncollected taxes by half

The Government will be taking various measures to reduce the country’s uncollected taxes known as the “black economy” from the current 30% to 15% by 2020.

Deputy Finance Minister Datuk Ahmad Maslan said the black economy was essentially the portion of a nation’s taxes that remained undeclared due to illegal activities or tax avoidance.

“Most developed countries record about 15% of loss in income due to the black economy.

“We currently stand at 30% and we hope to reduce this percentage with the introduction of the goods and services tax and easier methods for tax payment such as the e-filing,” he told reporters after conducting an official visit to the state Customs Department headquarters yesterday.

Ahmad said that it was difficult to determine exactly how much the country had lost due to uncollected taxes but the figure should run into the billions.

“For example, if we spend about RM24.8bil for subsidised petroleum and 10% of the transactions are undeclared due to smuggling or illegal selling, we lose RM2.4bil.

“That is definitely a lot of money and we have to find ways to identify the methods used to evade tax and solve this problem,” he said.

Smuggling and wrongful declaration of goods, and manipulation of transfer pricing were all factors that contributed to the growth of the black economy, he said, adding that the ministry would also work together with the Inland Revenue Board and enforcement agencies, including the police, marine police and the Malaysia Maritime Enforcement Agency, to curb the illegal smuggling of goods.