LHDN: Health minister's suggestion involves tax law, we'll look into it

KUALA LUMPUR: The Inland Revenue Board (LHDN) has not made any decision on whether to allow specialist doctors to pay corporate income tax rather than personal income tax.
“We already had engagement with the Malaysian Medical Association (MMA) and Persatuan Doktor Pakar but we have not finalised all the cases and we are going to meet up again with MMA soon,” said LHDN CEO Datuk Sabin Samitah.
“We are looking at this statement by the minister. The suggestion involves the tax law so we have to look into it. There is no decision yet,” he told reporters at the LHAG Tax, GST & Customs seminar yesterday.
Last month, Health Minister Datuk Seri Dr S Subramaniam urged LHDN to work together with MMA to review and find solutions for tax payments by medical practitioners. It is common practice for doctors in the private sector to form private limited companies to offer their services and declare their income under the company.
Subramaniam's suggestion was in response to Sabin's comments that over 3,000 specialist doctors were found to have underpaid their taxes by wrongly declaring income as corporate income rather than individual income.
“What we are doing now actually, we are finalising the audit for all the cases. We have given them a timeframe to submit on voluntary disclosure by end of last year and most of the doctors have submitted their declaration on voluntary disclosure. We are finalising most of the cases,” said Sabin.
He said LHDN cannot amend the tax law just to cater to one segment of the community as any changes would affect other professions that may be declaring income tax in a similar way.
“There is no guarantee that we are going to change the law. We really have to look into it. It is only a suggestion from the minister,” he added.
Last month, Sabin said some 2,229 specialist doctors came forward with voluntary declarations with tax and penalties amounting to RM400 million.
He said the individuals who did not come forward with voluntary declarations during the concession period would be audited and if found to be non-compliant, would be registered in the Monitoring Deliberate Tax Defaulters Programme (MDTD) list.
In response, MMA said that the formation of a private limited company by doctors was and is entirely legal as there are no laws restricting or preventing doctors from doing so.
Earlier in his speech, Sabin said LHDN will continue its focus on enforcement activities and assured the public that large tax payers are subject to the watchful eye of LHDN.
“We will also continue with our effort to tackle aggressive tax planning, the underground economy as well as the cash economy. Initial steps that have been taken by LHDN is through the setting up of the Aggressive Tax Planning Division and the Duta Investigation Branch,” he added.
Sabin said the establishment of the Tax Avoidance Taskforce in December last year bolstered its efforts in ensuring multinational and large public and private groups operating in Malaysia, pay the right amount of tax.