Taxmen’s raids rattle Labuan importers

Angry importers in Labuan claim the IRB has frozen their accounts as a result of crackdown and they are unable to do any transactions including servicing loans and paying staff salaries.

KOTA KINABALU: The Inland Revenue Board (IRB) has launched a wide-ranging investigation into money-laundering and smuggling activities via the tax haven of Labuan, the country’s international offshore financial centre.

Teams of IRB and other enforcement officers visited the premises of several importers and distributors of duty-free goods and hauled away company documents after questioning executives this week.

According to business sources, the bank accounts of some of the companies and their directors have also been frozen.

The raids, which were conducted yesterday morning, involved several IRB personnel directly from its headquarters in Kuala Lumpur.

It is believed that the investigation is part of a major crackdown on income tax evasion, under-declaration of goods and smuggling activities – issues that have been plaguing the island tax haven for decades.

According to the local media, an affected businessman, who declined to be named, said the Anti-Money Laundering Act 2001 was being applied loosely.

The free-wheeling liquor trade on the island is expected to slow down and could adversely affect the island’s tourism industry as duty-free beer and liquor are the most popular purchases by tourists and visitors.

Businesses in Sabah are also warily watching the crackdown on the island as their main source of beer has dried up just as the Kaamatan or Harvest Festival, a time of merrymaking by the local native community, is being celebrated.

Importers of retail products have been shaken and angered by the action which they say has brought their businesses to a standstill as they are unable to conduct any transactions including servicing loans, paying staff salaries and meeting other financial commitments.

Over 100 shops on the island which rely on the importers for their stocks have also been affected.

This is the second major operation being conducted on businesses on the island.

Holders of approved permits (APs) to import high-demand, foreign-made vehicles into the country have also been investigated and had their accounts frozen.