A TOTAL of 14,858 tax residents from more than 100 countries were found to have failed to submit income tax returns involving offshore financial account balances exceeding RM10 billion.
The Inland Revenue Board (LHDN) detected the non-compliance through international financial account information exchange with more than 100 countries.
LHDN said the detection was part of efforts to strengthen tax compliance and curb cross-border tax evasion.
It said the accounts with significant balances involved jurisdictions such as Luxembourg, Hong Kong, Guernsey, the Cayman Islands, the Bahamas and Bermuda.
“LHDN has issued reminders to the relevant tax residents as a voluntary compliance approach, while allowing them to review and declare their income before any enforcement action is taken,” it said in a statement yesterday.
LHDN advised tax residents with undeclared income and offshore financial accounts derived from taxable sources to come forward voluntarily in the near term to make the necessary declarations.
It said this was to avoid penalties and legal action under the Income Tax Act 1967.
“LHDN remains committed to administering the country’s tax system in a transparent, professional and integrity-driven manner in line with international tax standards,” it said.
The board said it would continue strengthening tax governance through a strategic approach and cooperation from all parties to safeguard public interest and national development.
Separately, Universiti Teknologi Mara (UiTM) senior economics lecturer Dr Bashir Ahmad Shabir Ahmad said tax revenue accounted for about 95% of national income, either directly or indirectly.
He said failure to report taxable income deprived the government of additional funds needed to implement planned development projects.
“Based on LHDN’s statement, the total balance of undeclared offshore financial accounts exceeds RM10 billion, which I estimate could translate into tax collections amounting to hundreds of millions of ringgit,” he said, as quoted by Utusan Malaysia.
Bashir said the failure to collect such taxes limited the government’s ability to fund subsidies and upgrade public facilities such as hospitals, schools and roads.
He added that even modest revenue losses could affect socio-economic development and said tax non-reporting was unfair as the individuals still benefited from public infrastructure and services.
Meanwhile, Universiti Sains dan Teknologi Malaysia (MUST) economics expert Prof Emeritus Dr Barjoyai Bardai said persistent tax non-compliance had macroeconomic implications by reducing public funds for education, healthcare and social assistance.
He said continued non-compliance also increased pressure on the country’s fiscal position and could force the government to raise debt to finance budget deficits.
Barjoyai added that the main issue in Malaysia’s tax system was not tax rates but persistent compliance leakages, particularly among individuals with multiple income sources and those operating in the shadow economy.
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