AG Report: Thousands evade tax amounting to millions

PETALING JAYA: Thousands of individual taxpayers with business income have evaded tax amounting to millions of ringgit for the whole of last year.
The Auditor-General's Report 2014 Series 3 revealed that 1,383 taxpayers, involved in more than 5,900 cases, have tax arrears amounting to RM44.03 million.
An audit carried out between November 2014 and February 2015 found that 1,351 taxpayers owed RM26.32 million for more than two years, with the amounts ranging from RM20.08 to RM945,347.
Estimated assessment was also not raised against 2,432 to 10,793 taxpayers for having unused credit of RM1,000 and above, amounting to RM156.58 million.
The report further disclosed that no action was taken by the Inland Revenue Board (LHDN) in preventing taxpayers involved in 802 cases with tax arrears of over RM25 million from leaving the country, adding: "Civil suits against 1,356 taxpayers with tax arrears amounting to RM42.68 million were not taken".
Several other weaknesses that required attention were also pointed out in the report:
» no action taken after the date of collection (of the last transaction ledgers for the year of assessment with tax arrears) from two to 82 months involving 27 taxpayers comprising 88 cases amounting to RM351,237;
» no further action taken from the last collection date from two to 155 months against 870 taxpayers involving 3,437 cases with tax arrears amounting to RM26.74 million;
» information on taxpayers status in the Self Assessment System Non Company (STSNC) was not updated involving 111 active files with tax arrears amounting to RM4.02 million and 54 closed files with tax arrears up to RM2.46 million;
» ineffective monitoring against 221 taxpayers for non-compliance with the tax installments schedule amounting to RM4.44 million;
» prosecution had not been taken on 37,792 (93.2%) CP626 compounds issued and 56 (51.4%) CP634 compounds issued manually.
The audit, however, found that tax collection increased by RM305.72 million (8.7%) in 2014 as compared to 2013, as well as by RM309.63 million (9.7%) in 2013 as compared to the previous year.
The report also recommended that LHDN, among other things, should improve its monitoring mechanisms to be more systematic and thorough, regularly update data of eligible taxpayers, collection of tax arrears be done immediately and follow-up action be taken against taxpayers who often deliberately and repeatedly do not comply.