Earlier this year, there were reports of the inland Revenue Board of Malaysia (IRB) initiating probes and audits against a number of SVDP participants in relation to the periods for which the voluntary disclosures were made.
The previous government administration had introduced the SVDP1to encourage taxpayers to come forward to disclose their previously misreported income and deductions. A lower penalty rate of 10% or 15% was offered. Under the Operational Guidelines No. 1/2019 on the SVDP (“SVDP Guidelines“), the Inland Revenue Board (IRB) had stated it would accept such disclosures in good faith, and that audits would not be carried out for the years in respect of which voluntary disclosures were made.
In a media statement released by the IRB on 9 March 2021, the IRB clarified that its promise to refrain from future audits was conditional upon, among others, the taxpayers ensuring that the voluntary disclosure made takes into account all taxable income. Audits or investigations by the IRB may be conducted if the SVDP participants did not fully comply with the conditions stipulated under the SVDP Guidelines.