Updated SVDP 2.0 guidelines and FAQ

On 22 August 2023, the Inland Revenue Board of Malaysia (“IRB”) provided an update to the Special Voluntary Disclosure Program 2.0 (“SVDP 2.0”) in relation to the Operation Guidelines No.2 Year 2023 (Amended) and Frequently Asked Questions (“FAQ”).

The salient changes on the SVDP 2.0 are:

1. Operational Guidelines No.2 Year 2023 (Amended)

Paragraph 5.10 which states that audit / investigation action will not be carried out in the future for the YA in which voluntary disclosure is made has been updated to add that if voluntary disclosure is made on non-transfer pricing issues only and it is found that there is a risk on transfer pricing (“TP”) issues, audit/investigation action can be taken on the TP issues, and vice versa.

2. FAQ

Question 4 – SVDP 2.0 does not apply for amendment of incorrect tax rates used.

Question 7 – New taxpayers for SVDP 2.0 are those:

who have yet to obtain a Tax Identification Number (“TIN”);
without any tax transactions in IRB’s records; and/or
who are declaring income to IRB for the first time.

Question 23 – Issuance of SVDP 2.0 Letter by the IRB to the taxpayers:

Taxpayers who have submitted voluntary disclosure through the Income Tax Return form/Real Property Gains Tax return form via e-Filing, and meet the requirements, can contact the nearest IRB state/special branch to obtain the SVDP 2.0 Letter.

Question 24 – Submission of voluntary disclosure by tax agent

A tax agent may submit a voluntary disclosure for a taxpayer via the TAeF System or the MyTax Portal. Details and procedures have been set out in the FAQ.

Question 29 & 46 – Circumstances under which audit/investigation can be taken:

If voluntary disclosure is made on non-TP issues only and it is found there is a risk on TP issues, audit investigation action can be taken on the TP issues, and vice versa.
Tax payment on the voluntary disclosure is not followed within the stipulated time frame.

Question 40 – Clarification to paragraph 5.5.6 of the SVDP 2.0 Guidelines:

Voluntary disclosures will be accepted for TP issues involving upward TP adjustments regardless whether it results in an assessment or not;
For downward TP adjustments, only taxpayers engaged in domestic controlled transactions and having a positive net tax effect are eligible for voluntary disclosure on the condition that both parties make voluntary disclosure on TP.

Question 42 – Reference to Question 40:

If there is no change to the net impact of tax position, both parties are not eligible under the SVDP 2.0.

Question 43 – Where one of the related parties in a transaction has tax incentives/losses carried forward or huge unabsorbed capital allowance, those:

With only domestic controlled transactions; and
TP adjustment which results in positive net tax impact will be eligible for the SVDP 2.0.

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