Guan Eng offers to testify if legal action taken over tax policy “reversal”

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Former finance minister Lim Guan Eng is willing to take the stand if taxpayers haul the government to court for its alleged reversal on the Inland Revenue Board’s (IRB) special voluntary disclosure programme (SVDP).

“I don’t understand why they (the government) made a U-turn.

Sayuti Zainudin

“Perhaps they are running out of money. I think someone will challenge this in court and they might win the case. I am willing to become their witness as well,” he said.

Under the SVDP, initiated by the previous Pakatan Harapan government, taxpayers who declare their misreported income and deductions are subjected to a low penalty rate of between 10 and 15 percent compared to a maximum of 300 percent as stipulated under the Income Tax Act 1967.

Lim was responding to a Sin Chew Daily news report, which quoted the Chartered Tax Institute of Malaysia (CTIM) receiving complaints regarding the alleged reversal of the SVDP policy.

“We still remember how IRB’s enforcement team during the BN era chased after taxpayers accompanied by MACC and police officers with M16 guns and wearing balaclavas. They will raid your office as if you are a terrorist.

“It was really terrifying,” the former minister said, adding that Harapan put an end to such practices after coming into power.

Although certain quarters criticised the SVDP as reducing the total income collected by the government, Lim said IRB might not be able to collect the same amount in penalties through their investigation process.

“Some claim such a programme benefits the taxpayers, but at least they pay. We don’t need to waste time to investigate.

“At least they know they have complied with the law and will have some peace of mind,” he added.

At the time, Lim said IRB would issue a letter of clearance stating that no further audit or investigation would be conducted against their income.

“If any officers come to them, they just need to show the letter to prove that everything had been settled and can enjoy a fresh start.

“This was a win-win solution by the Harapan government, where the government can collect taxes while taxpayers can fulfil their obligations without facing any problems,” he added.

According to Lim, the guidelines stated that the letter of clearance is issued in “good faith”, which meant that voluntary declarations cannot be deemed as legalising criminal activities, but also prevented the authorities from taking action against those who inadvertently under-declared their income.

“For example, if someone is a criminal or corrupt like (fugitive businessperson) Jho Low, even if he takes part in the SVDP programme and pays taxes, the money which he robbed would not become legal because the source of the income is illegal.

“If you operate an illegal business such as an underground casino, prostitution or drug trafficking, all these won’t be legalised by paying taxes,” he added.

Meanwhile, former prime minister Najib Razak says he wants Lim to testify in his court case against the LHDN.

Najib wondered if Lim could be a witness in his case over tax payments totalling about RM1.7 billion due to LHDN.

“I want Guan Eng to tell the judge why during his tenure as finance minister, LHDN considered the RM2.6 billion in personal donations, which had been subsequently returned, as income,” he said in a Facebook post.

Najib also said he was fined RM1.7 billion by LHDN over this deposit, with the tax rate being calculated as 26%+40%+10%+5% in accumulated penalties.


“Since when did the policy on income tax change?” Najib asked.

The RM2.6 billion deposited into the former prime minister’s personal Ambank accounts was confirmed in Najib’s SRC and 1MDB-Tanore court hearings to have been returned to the sender four months after it was deposited.

In July last year, the Kuala Lumpur High Court allowed LHDN to proceed with a summary judgment to recover RM1.69 billion from the sum which Najib claimed he had returned four months after receiving it in 2013.

In October, Najib appealed against the decision.