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Special Voluntary Disclosure Programme 2.0 in Malaysia

This programme targets taxpayers who have either not paid or underpaid their taxes, providing them with an opportunity to voluntarily report their income.


Introduction

The Special Voluntary Disclosure Programme (SVDP) 2.0 introduced in the Malaysia Revised Budget 2023 is aimed at providing taxpayers who have not paid or underpaid their taxes an opportunity to voluntarily report their income.


SVDP 2.0 covers both the Inland Revenue Board (IRB) and Royal Malaysia Customs Department (RMCD), ensuring that various direct and indirect taxes are accounted for.


One of the key incentives of SVDP 2.0 is the zero percent penalty and zero percent surcharge, creating an attractive proposition for individuals and corporations to come forward.


Timing

This program is set to run between 06 June 2023 and 31 May 2024, allowing ample time for eligible taxpayers to take advantage of this opportunity.


Who is eligible to apply for SVDP 2.0?

SVDP 2.0 covers various types of direct and indirect taxes, including individual and corporate income tax, Real Property Gains Tax (RPGT), stamp duty, transfer pricing, sales tax, service tax, GST, and tourism tax. Below is the elaboration in bullet points:


Direct tax:

  • Individual income tax

  • Corporate income tax

  • Real Property Gains Tax (RPGT)

  • Stamp Duty

  • Transfer Pricing

Indirect tax:

  • Sales tax

  • Service tax

  • GST

  • Tourism tax

Does SVDP 2.0 cover new taxpayers? Disposal of assets?

SVDP 2.0 encompasses both new taxpayers reporting income for the first time and existing taxpayers who have under-declared or undeclared income. Furthermore, it also covers unreported disposal of assets and executed instruments that have not been duly stamped. Below is the elaboration in bullet points:

  • New taxpayers who are reporting income for the first time, with or without Tax Identification Number (“TIN”)

  • Existing taxpayers who have reported their income but have under-declared or undeclared income

  • Unreported disposal of assets such as real property and shares in real property companies

  • Executed instruments that have not been duly stamped

  • Transfer pricing adjustments which are subject to the surcharge under Section 140A(3C) of the Malaysian Income Tax Act, 1967.

Which year of assessment and taxable period does SVDP 2.0 cover? IRB extends SVDP 2.0 to different years of assessment depending on the taxpayer category, with new taxpayers being applicable for YA 2022 and prior, and existing taxpayers for YA 2021 and prior. Assets disposed in YA 2022 and prior are covered for RPGT, and agreements executed on or before 1 May 2023 are eligible for stamp duty. Below is the elaboration in bullet points:

  • New taxpayers – YA 2022 and prior

  • Existing taxpayers – YA 2021 and prior

  • RPGT – Assets disposed in YA 2022 and prior

  • Stamp duty – Agreements executed on or before 1 May 2023

SVDP 2.0 under RMCD covers taxes that are payable up to 28 February 2023.


Payment of tax

Under SVDP 2.0, taxpayers can settle their tax payments either as a lump sum within 30 days from the date of issuance of the notice or through instalments. The instalment option requires the submission of an application through the MyTax Portal, with additional supporting documentation necessary for instalments beyond May 2024. Below is the elaboration in bullet points:


One lump sum payment:

  • Within 30 days from the date of issuance of notice by the tax authorities.

Instalment payment:

  • Application to be submitted through the MyTax Portal via the SVDP 2.0 Instalment Payment Application Form:

    • For instalments until 31 May 2024, no supporting documentation required;

    • For instalments beyond 31 May 2024, supporting documentation such as 3 months bank statements, cash flow analysis for the next 12 months and latest property details are required.

Failure to make tax payments

Failure to make tax payments within the stipulated period will result in penalties imposed under the existing provisions of the law. Further consequences may include legal action and the possibility of an audit or investigation in the future.


Benefits of SVDP 2.0

The benefits of participating in SVDP 2.0 are significant. The tax authorities accept voluntary disclosure in good faith, with applications finalised within 14 days of submission. The benefits are as follows:

  • All disclosures made under SVDP 2.0 will be accepted by the IRB and RMCD in good faith, hence taxpayers should not worry that the process would include an intense security

  • Waiver of penalties and surcharges

  • Applications will be finalised within 14 days from the date of submission

  • Documentation required for SVDP 2.0 is far less onerous than during an audit

  • The IRB and RMCD will not conduct an audit for the years of assessment or taxable period that have been covered under SVDP 2.0 programme

Conclusion

In conclusion, SVDP 2.0 offers a favourable opportunity for taxpayers in Malaysia to rectify their tax obligations proactively. The program provides leniency through zero percent penalties and surcharges while minimising future audit risk. Taxpayers should take advantage of this initiative to address their tax liabilities in a timely manner.

 

Should you require further clarification, please do not hesitate to contact our Ms Pei Sze Low at 03-2705 6546 or email to pei_sze@gskassociates.net or Managers whom you are accustomed to dealing with.


All information contained herein is summarised based on the information provided in the Malaysian IRB's website updated on 27 July 2023 and it is intended to provide a general overview of the subject matter and should not be regarded as a basis for tax advise for specific circumstances or as a a basis for formulating business decisions. No responsibility for loss to any person acting or refraining from acting as a result of any material in this publication can be accepted by GSK & Associates. Readers should not act on the basis of this publication without seeking professional advice.




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