PKR leader wants IRB to check if those named in Pandora Papers paid due taxes
Terengganu PKR chairperson Azan Ismail is urging the Inland Revenue Board (IRB) to start checking on the offshore holdings of those named in the Pandora Papers to ensure that all taxes owed are paid.
He said Malaysia should use the automatic exchange of information agreement signed with the Organisation for Economic Co-operation and Development (OECD) countries to get information about assets held by Malaysians in tax havens and offshore entities to check if taxes were paid.
“I am certain the...
Terengganu PKR chairperson Azan Ismail is urging the Inland Revenue Board (IRB) to start checking on the offshore holdings of those named in the Pandora Papers to ensure that all taxes owed are paid.
He said Malaysia should use the automatic exchange of information agreement signed with the Organisation for Economic Co-operation and Development (OECD) countries to get information about assets held by Malaysians in tax havens and offshore entities to check if taxes were paid.
“I am certain the IRB has the processes that it can commence immediately.
“As it is now, ordinary Malaysians are under pressure to pay up income taxes, so why shouldn’t billionaires also face the same pressure?” Azan said.
He added that this would bring about faster results than trying to impose new taxes like a windfall tax, to try to boost the national coffers in an economically challenging time.
“The only thing is that there needs to be a check on whether the assets fall under the double taxation exemptions.
“In this case, it is better for us to tax (these individuals) first before the other country does and I am sure, as patriotic Malaysians, they would want to pay taxes to Malaysia instead of to other countries,” Azan added.
READ MORE: KINIGUIDE | Offshore trusts: Asset protection, financial privacy or tax evasion?
The Pandora Papers is a trove of documents leaked from 14 service providers who assist individuals to set up offshore entities, mostly in tax havens.
The leak, the largest of its kind, was made to the Washington DC-based International Consortium of Investigative Journalists, which then provided access to its partners worldwide, including Malaysiakini.
Among those uncovered by Malaysiakini in the Pandora Papers include former finance minister and corporate bigwig Daim Zainuddin, Finance Minister Tengku Zafrul Abdul Aziz and Umno president Ahmad Zahid Hamidi - all of who said they did not break any law and that all taxes due have been paid.
They were named on Monday when Malaysiakini published a non-exhaustive list of Malaysians revealed in the Pandora Papers.
The list is non-exhaustive given the size of the leak, which amounts to 1.92 Terabytes worth or 11.9 million records.
This means there is no definitive figure of the size of all assets held by Malaysians named in the Pandora Papers.
'Just check first'
However, Azan argued that looking at previous estimates of illicit outflows out of Malaysia may help gauge how much the IRB could recover.
Using the Global Financial Integrity (GFI) estimate of illicit outflows out of Malaysia, Azan believes Malaysia could recover up to RM200 billion in lost taxes by scrutinising the assets and taxes paid by individuals with offshore holdings for possible income tax evasion.
The GFI has estimated that Malaysia lost up to US$431 billion (RM1.8 trillion) in illicit outflows between 2005 and 2014, caused by false invoicing and leakage in the balance of payments.
However, this does not refer to individual income tax evasion, while Azan’s estimate makes the unlikely assumption that all assets held by Malaysians overseas are taxable in Malaysia, or have not had taxes paid on them.
Holdings linked to Daim in the Pandora Papers, for example, include property rental income made in London - something exempt from taxation in Malaysia, according to the Malaysian Income Tax Act 1967.
These were held by companies registered in the British Virgin Islands, but some other trusts and firms linked to Daim were registered in jurisdictions like Samoa.
When contacted, Daim said he has paid all taxes due in the jurisdictions in which he does business.
“If that is found to be true, then that is fine, but first we have to check,” Azan said.
READ MORE: How Daim, M'sia's uber-rich use S'pore to store money offshore
On Tuesday, the European Union placed Malaysia on a “grey list” of “non-cooperative jurisdictions for tax purposes”.
It was particularly concerned about the exemptions given by Malaysian law for foreign-sourced income.
Although this exemption was meant to avoid double taxation, the EU is concerned that it could also lead to “double non-taxation”.
The EU said Malaysia is on the grey (Annex II), and not black (Annex I) list because it has committed to making amendments to its “harmful” foreign-income sourced income taxation regime by the end of next year.
Other countries and territories on the grey list include Costa Rica, Hong Kong, Qatar and Uruguay, while blacklisted countries include American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.
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