'Country may lose senior doctors due to IRB witch-hunt'

The Inland Revenue Board's (IRB) move to slap medical specialists with millions of ringgit in backdated taxes may drive them out of business or force them to take their practice overseas, warned the Malaysian Medical Association (MMA) today.

While the country has seen an oversupply of medical graduates, it is in fact facing a shortage of specialists and it is this pool of doctors who are highly experienced and consult at public hospitals that the IRB is pursuing.

"The country may lose the senior specialists who can choose to move their practices overseas or retire as their children are already studying or working abroad or have properties there," MMA president Dr Ashok Zachariah Philip told Malaysiakini.

Ashok said the more junior specialists will also have less options and be more pressured by IRB's move.

He added that if the senior specialists do shut down their practices, the government will be forced to pay higher medical costs as many patients will turn to public hospitals.

According to MMA, there are more than 40,000 doctors nationwide in government and private hospitals and clinics.

Only 4,000 of them are specialists, who are normally paid 10 to 30 percent of a patient's hospital bill.

Ashok said the case of 20 private specialists in Seremban being instructed by the IRB to pay sums of RM1.5 million to RM4 million for under-declaring their taxable income was an important litmus test for doctors across the country.

"They received the IRB's letter a month ago. If this is proven successful, we worry that the IRB might go after the medical specialists nationwide," he said.

The IRB on its part has accused the medical specialists of under-declaring their incomes by setting up and using private limited companies for tax purposes while offering their services to hospitals in their personal capacity.

It is now seeking from the specialists five years in backdated taxes with a 100 percent penalty.

May take matter to court

Ashok pointed out the use of private limited companies was a common practice and was done on advice of accountants.

"(When it comes to taxation,) the doctors do not know what is good or bad so they leave it to their accountants. Setting up a company is not illegal," he said.

He said the IRB had also previously audited the doctors' tax filings and did not raise any issue until now.

"So, we are concerned as to whether this is a new rule from the IRB. We do believe in fair tax, but we do not believe in a sudden change of rules.

"Of course, it is their right to set new rules but it is not right to backdate any shortfall in tax payment for five years," Ashok said.

The MMA will discuss the matter at a meeting tomorrow and seek advice from accountants and tax experts before engaging the IRB on the matter.

"If the doctors have made a mistake, we will change and appeal to IRB for a reduction in penalty.

"But if there is a strong case, we will advise doctors to take the matter to court," Ashok added.

Malaysiakini has contacted the IRB for its response. -Mkini