What is the risk of taxpayers contesting harsher tax evasion penalties?

Question

Accepted Answer

Taxpayers May Contest Harsher Tax Evasion Penalties

The Inland Revenue Board's (IRB) intention to increase tax evasion penalties to the full 100 per cent allowable by law, removing the previous practice of offering a 45 per cent penalty for first-time offenders, carries a significant risk of increased legal challenges from taxpayers. This shift, set to take effect from 2018 for undeclared or under-declared taxes, could be perceived as counterproductive by tax consultants.
Increased Likelihood of Legal Challenges

Tax consultant Grant Thornton has indicated that the removal of leniency for first-time offenders, specifically the previous option to impose a 45 per cent penalty, could lead to a greater number of taxpayers opting to contest such penalties in court. This suggests a potential for prolonged legal disputes rather than immediate compliance.
Business Backlash Against Uniform Penalties

Furthermore, the move to apply the full 100 per cent penalty without distinction could alienate businesses. Grant Thornton's country managing partner Datuk NK Jasani noted that businesses might resist being treated identically to "hardcore tax defaulters," implying a concern over the loss of differentiated penalty structures.
Alternative Revenue Generation Strategies

In light of the IRB's objective to increase revenue, Grant Thornton suggested exploring alternative approaches. As an example, the Indonesian government's Tax Amnesty initiative was highlighted as a "whopping success," reportedly leading 800,000 tax evaders to declare a cumulative US$350 million. Such a strategy, it was proposed, could enhance both short-term collections and the long-term tax base.

Reading history

Hide →

This history is cleared when the page is closed.

What is the risk of taxpayers contesting harsher tax evasion penalties?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

1

0

0

Share with friends