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April 12, 2019
Malaysia updates the Special Voluntary Disclosure Program
Malaysia’s Ministry of Finance (the MOF) and Inland Revenue Board (the IRB) issued several media releases on the Special Voluntary Disclosure Program (the Special Program) introduced in the 2019 Budget.1 The Special Program offers reduced penalty rates for taxpayers to voluntarily disclose any unreported income, including income maintained in offshore accounts, for income tax, petroleum income tax and real property gains tax purposes. The reduced penalty rates apply to stamp duty as well. The Special Program was initially meant to run from 3 November 2018 to 30 June 2019.
This Alert summarizes the key aspects of the media releases.
Extension of the Special Program
Due to the overwhelming responses from taxpayers, the voluntary disclosure under the Special Program will be extended by three months. The current disclosure periods and corresponding penalty rates are as follows:
Update on penalty rates after the Special Program
It was previously announced that penalties for disclosures made after the Special Program expires would be 80% to 100%/300%.2 In the media releases, both the MOF and IRB have now stated that the minimum penalty rate for disclosures made after 30 September 2019 is 45%.
1. See EY Global Tax Alert, Malaysia releases 2019 Budget, dated 4 December 2018.
2. Where no prosecution has been instituted, the maximum penalty rate of 300% applies to taxpayers who fail to submit their tax returns; whereas the penalty rate of 100% applies to taxpayers who fail to report the correct income.
3. This generally refers to an accounting period ending in 2018.
For additional information with respect to this Alert, please contact the following:
Ernst & Young Tax Consultants Sdn Bhd, Kuala Lumpur
Ernst & Young LLP, Malaysia Tax Desk, New York
Ernst & Young LLP, Asia Pacific Business Group, New York