IRB should stop 'tax terrorism' and the targeting of SMEs

While the DAP welcomes the efforts of the Internal Revenue Board (IRB) to increase tax revenue through productivity gains and enhancing tax compliance, this should not result in the carrying out of ‘tax terrorism’ against Small and Medium Enterprises (SMEs), including going after them for back taxes dating from more than 6 years ago.

In the interests of rule of law, any increase in tax collections should not come at the expense of unfair persecution of certain sectors only whilst letting off the politically connected ones. The IRB has succeeded in increasing income tax collections from companies from RM 36.3 billion in 2010 to RM 46.9 billion in 2011, an increase of 29% as well as an increase from personal income taxes from RM17.8b in 2010 to RM 20.2 billion in 2011, representing a 13.5% increase. Company income tax is projected to increase by another 15.5% to RM 54.1 billion in 2012 while personal income taxes are projected to increase by 11.1% to RM 22.4 billion during the same time period.

However, this new found commitment by the IRB to go after tax evaders of all sorts should not degenerate into a witch hunt. This includes going after back taxes which may or may not have been paid more than 6 years ago and also using the Anti-Money Laundering Act 2001 to browbeat some of these SMEs into ‘settling’ the IRB’s outstanding claims.

The DAP recognizes that the SMEs in Malaysia are already facing many challenges amidst global economic uncertainty. The SMEs, which are also the backbone of our economy, are also coping with new domestic challenges including complying with the Competition Act 2010 and preparing for the implementation of the minimum wage this year.

Instead of using strong-arm tactics and ‘tax terrorism’ against these SMEs and using the Companies Commission of Malaysia to go after NGOs such as SUARAM, the IRB should prove they are fair by investigating the RM 40 million ‘donation’ made to UMNO through the Sabah Chief Minister Tan Sri Musa Aman, those involved in the RM250 millon National Feedlot “cows and condos” Scandal as well as the extraordinary wealth of BN leaders such as the Sarawak Chief Minister.

DAP calls for the government to consider amending the Limitations Act 1953 so that government agencies such as the IRB are not given carte blanche to pursue tax claims without a statute of limitations. DAP recommends that the 6 years which is currently being used as a statute of limitations for private companies to seek claims under the Limitations Act 1953 should also be used by the IRB. DAP also calls for the government to consider giving SMEs an ‘amnesty’ for the non-payment of back taxes from more than 6 years ago in order to help these SMEs through these tough economic times.

The Internal Revenue Board(IRB) should stop ‘tax terrorism’ and the targeting of SMEs but should prove that it is fair, impartial and upright in upholding the law without fear or favour by also investigating those who have made illegal ‘donations’ to BN, possesses extraordinary wealth with an extravagant lifestyle.

Lim Guan Eng DAP Secretary General & MP for Bagan