IRB: Expats owe RM213 million in taxes

Most of them have either falsified their real wages in the expatriate's application form or declared a lower wage than what they actually received, says IRB's CEO.

CYBERJAYA: More than US$50 million (RM213 million) in tax arrears has not been collected from expatriates who have left Malaysia since 2012, Inland Revenue Board (IRB) CEO Sabin Samitah said.

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

“We can also see (this) from the amount of remittances to their countries of origin and their luxurious lifestyle in this country,” he told reporters after launching the MyEXPAT system for expatriates’ income collection here today.

Also present was Malaysian Immigration Department director-general Mustafar Ali.

Sabin said IRB was in talks with 75 countries that had signed the Double Taxation Agreement to recover taxes 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,” he said.

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

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

To solve this problem, he said, IRB would work with the Immigration Department through the Expatriate Services Division (ESD) to check the status of their tax before leaving Malaysia.

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

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

He said the MyEXPAT system, formerly known as the Forin system, developed for internal use in IRB, would use information obtained from the Immigration Department to monitor tax matters relating to expatriates in Malaysia.

He said 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 will be used in all IRB branches nationwide from July 1 to ensure the entry of expatriates to Malaysia meets the stipulated conditions, even paying the required Malaysian income tax, he said.

Meanwhile, Mustafar said cooperation between the Immigration Department and IRB was sealed through a memorandum of understanding relating to the Information Sharing Cooperation Pertaining to Expatriates in Malaysia, which was signed on June 19, 2014, on dealing 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 the Immigration Department’s statistics showed that 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%).