KUALA LUMPUR, 15 Feb: Foreign-owned international companies operating under local licenses are obligated to pay taxes to contribute to the country’s revenue.
Chief Executive Officer (CEO) of the Inland Revenue Board (LHDN), Datuk Abu Tariq Jamaluddin emphasized the need to scrutinize shadow economic activities to ensure compliance with tax laws.
Adding that these clandestine business practices significantly impact the country’s tax revenue, often involving unregistered and unlicensed entities evading tax declarations, including cash-paid part-time jobs to evade income reporting and tax payments.
“These ‘stealthy’ business conduct have created a large impact on the country’s tax gap.
“We will be deploying our personnel to check not only on local citizens but also to identify foreigners and also the parties behind them, whether they comply with the taxation law,” he said after the Taxation CEO With the Media 2024 engagement session programme at Sunway Putra Hotel here today.
Last year, Malaysia lost approximately RM70 billion annually due to shadow economy activities, accounting for about 20% of the estimated total income of the shadow economy worth RM350 billion, equivalent to 30% of the Gross Domestic Product (GDP).
This year, Tariq has set a target of RM197 billion for direct tax collection by implementing strategies to ensure tax compliance.
The focus includes combating shadow economic activities and addressing undeclared wealth and assets, with scrutiny on individuals earning from online activities.
Under the law, LHDN has the authority to reopen any cases dating back five years, with no time limit if negligence or fraud is detected. – TVS
