Following the re-tabling of the Malaysian Budget 2023 on 24 February 2023, the Malaysian Inland Revenue Board (IRB) and Royal Malaysian Customs Department (RMCD) have reintroduced the Special Voluntary Disclosure Programme (SVDP) 2.0 and the Voluntary Disclosure Programme (VDP) which apply to direct taxes and indirect taxes respectively. A similar programme was previously implemented in 2022 for indirect taxes and in 2019 for direct taxes, although there are some key differences in respect of the scope and incentives.
Given that there are usually no formal voluntary disclosure routes for taxes in Malaysia, it would be an opportune time for businesses to carry out internal due diligence and address any tax compliance gaps through the SVDP 2.0 and/or VDP.
In terms of timeline, the VDP and SVDP 2.0 will be implemented from 6 June 2023 to 31 May 2024, and any overdue taxes that have been disclosed must be paid in full by 31 May 2024. The incentives offered under these programmes include, among others, a 100% penalty remission for the relevant voluntary disclosure made. Further, businesses that have participated in VDP and SVDP 2.0 will also be granted a period of audit immunity, provided that the disclosure is made in good faith and there is no element of fraud.
However, as opposed to the previous VDP in 2022, the current VDP for indirect taxes would not include export duties and taxes imposed on the importation of goods into Malaysia.
In view of the complete penalty waiver, the Malaysian tax authorities anticipate that the current proposed VDP and SVDP 2.0 will be well received by Malaysian businesses and result in a relatively significant collection in tax revenue.
Despite the incentives of the VDP and SVDP 2.0, taxpayers are encouraged to undertake a comprehensive review of their tax positions and assess the pros and cons of participating in the programmes before making a conclusive decision to undertake the disclosure.