Over US$50 million tax owed by expats who’ve left Malaysia

CYBERJAYA, 16 June 2017: 

More than US$50 million in tax arrears have not been collected from expatriates who have left Malaysia since 2012, said Inland Revenue Board (IRD) chief executive officer Datuk Sabin Samitah.

He said most of them were from the services sector, and had either falsified their real wages in the expatriate’s application form or had declared a lower wage from what they actually received.

He said some had also abused the student pass and did not attend college – but instead carried out businesses and did not declare the income from their businesses or reported them to IRD.

“We can also see (this) from the amount of remittances to their countries of origin and their luxurious life-style in this country,” he said after launching the MyEXPAT system for expatriate’s income collection here yesterday.

Sabin said IRD was in talks with 75 countries that had signed the Double Taxation Agreement to recover the tax from the expatriates.

“Although we still do not have a specific mechanism to do so, this method has proven effective as it has been done in some other countries.”

This year, Sabin said IRD will take various action – including blacklisting, fines or imprisonment against employers or sponsors who fail to carry out their responsibilities to deduct the tax of foreign workers before they return to their respective countries.

“IRD will conduct an investigation and audit those agents who bring in expatriates and foreign workers to Malaysia because there are reports saying that the agent do not disclose the income or commissions which were received from expatriates.”

He said IRD would work with the Immigration Department – through the Expatriate Services Division (ESD) – to check the status of foreigner’s taxes due before leaving Malaysia.

“If they fail to pay the tax, the expatriates will not be allowed to leave or enter Malaysia.”

According to statistics, Sabin said income tax collected from expatriates showed a consistent increase – RM201.31 million was collected last year compared to RM201.27 million and RM144.36 million collected for 2015 and 2014 respectively.

On the MyEXPAT system, he said the system – formerly known as the FORIN system developed for internal use in IRD – would use the information obtained from Immigration Department to monitor tax matters relating to expatriates in Malaysia.

This included a review of the issuance of the letter on the Settlement of Tax and ledger review over scheduled tax deductions.

The MyEXPAT system would be used in all IRD branches nationwide from July 1 to ensure the entry of expatriates to Malaysia met with the stipulated conditions – including paying required Malaysian income tax, he said.

Immigration director general Datuk Mustafar Ali said the department and IRD co-operation was sealed through a Memorandum of Understanding relating to the Information Sharing Cooperation Pertaining to Expatriates in Malaysia – signed on 19 June 2014.

This dealt with the issue of taxation of expatriates who work in Malaysia for a specified period using the Study Pass or Professional Visit Pass,

He said immigration statistics showed 12,415 companies had registered with ESD from April 2014 until May, and of that number, as many as 134.113 people had obtained working passes and professional visit passes – applied through the ESD system.

Mustafar said the top five sectors preferred by expatriates in Malaysia were construction and manufacturing (each 22%), services (14%), oil, gas and energy (11%) and education (8%).

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