Malaysia: Special Voluntary Disclosure Program 2.0

published on 19 June 2023 | reading time approx. 2 minutes

In the tabling of the Revised Budget 2023, it was announced that the Special Voluntary Disclosure Program (SVDP) would be re-introduced to incentivize taxpayers who have not paid or underpaid their taxes. The SVDP 2.0 running from 6 June 2023 to 31 May 2024 will allow for both, individual and corporate taxpayers with unpaid or underpaid taxes to make a voluntary disclosure without any penalties being imposed, i.e., 0 percent penalty and 0 percent surcharge. The SVDP 2.0 covers both, direct and indirect taxes.

What is covered by the SVDP?

New taxpayers (regardless of whether the person has a Tax Identification Number (“TIN”) and are reporting income for the first time;
existing taxpayers who have reported income to the Malaysian tax authorities but have under-declared or undeclared income;
unreported disposal of assets, i.e., real property and shares in real property companies;
executed instruments that have not been duly stamped after the time for stamping;
transfer pricing adjustments which are subject to the surcharge under Section 140A(3C) of the Malaysian Income Tax Act.

TAXES COVERED

1. Direct Tax

Corporate Income Tax
Personal Income Tax
Real Property Gains Tax (“RPGT”)
Stamp Duty
Transfer Pricing

Covered years of assessment (“YA”)

New taxpayers – YA 2022 and prior
Existing taxpayers – YA 2021 and prior
RPGT – Assets disposed in YA 2022 and prior
Stamp duty – Agreements executed on or before 1 May 2023

2. Indirect Tax

Sales Tax
Service Tax
GST
Tourism Tax

Covered period

Indirect taxes payable up to 28 February 2023

PAYMENT OF OUTSTANDING TAX UNDER SVDP 2.0

Tax payments under SVDP 2.0 must be settled:

Within 30 days from the date of issuance of notice by the Malaysian tax authorities (one lump sum); or
in instalments, application to be submitted through the MyTax Portal via the SVDP 2.0 Instalment Payment Application Form: 1. instalments until 31 May 2024 – no supporting documentation required; 2. instalments beyond 31 May 2024 – supporting documentation is required, i.e., 3 months bank statement, cash flow analysis for the next 12 months including current month; and latest property details.

Failure to settle the tax payments within the stipulated period will result in the imposition of a tax increase based on the prevailing provisions of the law. If the outstanding tax remains unpaid, legal action can be taken against the taxpayer and audit/investigation may be carried out in the future.

BENEFITS OF SVDP 2.0

Voluntary disclosure will be accepted by the IRB in good faith. Voluntary disclosure applications will be finalized within 14 days from the date of submission;
documentation required for voluntary disclosure is far less onerous than during a tax audit;
subject to conditions, voluntary disclosure may limit the risk of a tax audit in the future;
no penalty and surcharge for voluntary disclosure.