IRB Intensifying Criminal Crackdown On Tax Dodgers Among Businesses

By Nadia Jumri and Nur Natasha Aida Ismail

KUALA LUMPUR (Bernama) -- More cases of tax evasion among businesses will prosecuted as criminal offences as the Inland Revenue Board (IRB) is intensifying crackdown on tax dodgers under Section 114 of the Income Tax Act 1967.

IRB Investigation Department director Datuk Mohd Nizom Sairi said as companies resorted to sophisticated methods to avoid paying tax, the offences would be treated as criminal offences instead of civil cases.

He said some companies tried to portray genuine transactions purportedly to pay for material used by their business, including setting up fictitious companies as proxies with the aimed of showing little profit.

"When we come down hard on the proxies or third parties over the transactions, we found that the so-called companies do not exist and the purported transactions were never really made.

"There have been cases of accounts being rented with account holders being paid a monthly sum. The account holders claim that they do not know what the accounts are for. This will enable tax on profit payable to be reduced," he added.

Mohd Nizom said these antics involved elements like forging documents and invoices, and making false expenses and phoney contracts as well as creating two accounts - one for IRB to show little profit and another for the banks to show profit many times over.

Over a period of three years since 2011, he said 1,761 companies had been investigated for evading tax, 13 of them allegedly committed criminal offences.

During the same period, RM6.01 million of RM2.02 billion tax revenue was lost due to tax evasion by businesses due to criminal offences.

Mohd Nizom said previously, many tax evasion cases were settled out of court as civil settlements in accordance with procedures and provisions under the Income Tax Act 1967 and other Acts.

"The public are not aware of this as we had been focusing on civil cases by compelling tax dodgers to agree to settlement agreements in writing," he said.

He said investigations were considered closed after IRB was satisfied with the evidence and documents provided by tax dodgers on the amount of tax due and letters would be issued to them, denoting that no more instances of tax evasion were found.

"Starting last year, we began to focus on investigations into criminal offences and this is a major challenge for us, particularly in obtaining evidence to prove tax evasion occurrences," he said.

Mohd Nizom said the probe on criminal offences entailed making surprise visits, examining business or personal documents, taking statements from people who mattered, and after the procedures were completed, the IRD Legal Department would determine whether to take the cases to the court.

He said tax dodgers could be charged under the Income Tax Act 1967, the Penal Code (Act 574), the Criminal Procedure Code (Act 593), the Evidence Act 1950 (Act 56), the Whistleblower Protection Act 2010 (Act 711) and other related Acts.

The public could report on income tax evasion cases to the IRB via letter or email to, call 03-83138888 ext. 20601/20607 or go to the IRB headquarters in Cyberjaya and any of its state offices.

The identity of the complainant and information received will be kept confidential while each complaint will be studied and thoroughly investigated.


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