IRB, It’s time to “think out of the box”

Tam Yeng Siang copied his letter to New Straits Times, as follows:

I wish to refer to the letter by Ong Wai Leong, again on the issue of the Income Tax’s inability to repay taxpayers’ tax refunds promptly. So many letters have been published by you on the matter that this proves that something is seriously wrong with the delivery system of the IRB. In spite of the Director General’s recent TV interview, in which she promises such refunds to be made within three months, I would like to say that it’s an impossible dream, as long as the current procedures are not changed, and with it, the concept of Tax refunds at source. Allow me to elaborate.

*First the IRB is vigorously promoting e-filing which is a good thing. But in encouraging e-filing, has the IRB considered those who never use computers and ICT in their daily business?

*Second, in order for the IRB to effect refunds arising from dividends paid to individuals, the IRB requires the original dividend vouchers to be sent BY POST to Pandan Indah. These vouchers must be original, and must be verified individually by assessment officers, either against the E-forms, or the BE forms submitted manually together with the original vouchers. As long as the manual process of verification and authorisation is required, it is near impossible for the IRB to do this onerous task within a three month period, year in and year out.

*So, the way out of this mess is to re-think the issue of tax on individual dividends completely. Many years ago, the IRB made a very good decision to resolve the problem of taxpayers not declaring fixed deposit incomes in their yearly forms. They made the banks deduct a fixed rate of tax from the Interest incomes, and the banks then sent the taxes to the IRB directly. This decision had 2 positive effects. Moneys formerly hidden under pillows found their way to the banks, and the IRB found a relatively straightforward way of collecting tax from Interest income.

*For Dividend payments made to the individuals, the IRB can instruct the corporations to collect, say, just 5-10% of tax, remit the tax to the IRB, and refund the balance to the Individual taxpayer. The refunds can be easily made by the corporations at the same time the dividends are paid.

*With the corporations playing the IRB’s refund role (like the banks become collectors for tax on FD interest), the IRB at one stroke, will have solved the problem of needlessly verifying millions of original vouchers sent by post, and the IRB/POS Malaysia losing some of them. At this moment in time, if IRB loses the taxpayer’s original vouchers, the taxpayer is the only party to suffer a loss!

We must think ‘out of the box’ on a problem that sees no end, as evidenced by the almost daily complaints in the media. In this case of refunds of “tax at source”, if Muhammad does not go to the mountain, the Mountain must come to Muhammad

The letter by Ong Wai Leong referred to is as follows:

Income Tax: Don’t make us beg for a refund>

28 Mar 2007

MUCH has been said of the delivery system of the Employees Provident Fund as well as the Immigration Department’s high-tech machines to speed up passport renewal, but sad to note the Inland Revenue Board is still not in line with progress.

I retired in 2000 and was subsequently informed there was a tax refund due to me.

Till today, I have yet to be reimbursed despite the fact that I have made no less than 10 trips to the department to resolve this matter.

Each time, I am asked to fill in a form supposedly to facilitate the refund.

I cannot help but feel short-changed on this matter, largely because it makes me feel like I am begging for something which is mine.

This is too long for anyone to wait because the taxpayer may not be around for much longer and the reasons given are indeed not acceptable.

My worst experience was before Chinese New Year this year, where I expressed my plight to an officer.

I told him that the money would indeed come in handy as I am a retiree.

The reply was cold without even a word of concern.

IRB must show empathy in this pressing issue and do us a favour. Don’t make retired folks beg for our tax refund.

  1. #1 by polarbear78 on Wednesday, 28 March 2007 - 12:34 pm

    Malaysia Boleh Ke? There always a saying, when you owed someone money, they want the money now, but if the person owed you, it will be a besok lusa situation. This happened to Malaysia’s government agency. I just came back from the States, and I believe they IRS is one of the best agency in the world although the agency has its flaws. Why? If you owed them money, you will have to pay on time which happened in April or you can asked for extension which can be done by a small fees. However, if you cheated them, there will be an auditor send to your doorstep. But, if they owed your money or so called refund, you can expect the money to be at your house in less than two months. So, why do we want to pay these government servants extra money in their salaries? We have to review their works and comment more.

  2. #2 by HJ Angus on Wednesday, 28 March 2007 - 12:42 pm

    I support the idea that dividends should not be taxed for retirees as it will encourage people to invest for future needs.

  3. #3 by tsn on Wednesday, 28 March 2007 - 12:49 pm

    1.Don’t depend on IRB tax refund to survive, you will become the 1st Malaysian to die due to hunger.

    2. Must be fit and long live to enjoy IRB tax refund.

    3.Best thing is just forget about it, when you finally receive it, just treat it as lottery winning. Pretend to be happy.

  4. #4 by undergrad2 on Wednesday, 28 March 2007 - 12:51 pm

    In the U.S. this is the period for tax refunds. I submitted my federal and state tax returns electronically. Within three days I got my tax refund by way of direct deposit to my bank account.

    That is how fast it takes.

  5. #5 by k1980 on Wednesday, 28 March 2007 - 1:16 pm

    Just a case of an underdeveloped 3rd world country staffed with 4th world mentality ministers trying to pass itself as a 1st world nation. The TMNet “broadband” internet connection breaks off by itself several times a day while being used!

  6. #6 by Libra2 on Wednesday, 28 March 2007 - 1:39 pm

    Further to the US tax refunds posted above.
    When my daughter returned from the US to Malaysia, she submitted her tax refund claims by post and followed up with a phone call to have her cheque sent to her in Malaysia.
    An officer replied, “Sure, it is is your money and we will send it to you, whereever you are.”
    Believe it or not within the same month she received both her federal and Carlifonia state tax refunds.
    Malaysia will take a 100 years, if at all, to do that within the country.

  7. #7 by shortie kiasu on Wednesday, 28 March 2007 - 2:38 pm

    This issue of refund by IRD to taxpayers, due to overpayment by taxpayers, is long overdue, and no solution seems to be in sight yet.

    This one of the important areas of poor public delivery system greatly manifested and PM Abdullah Ahmad Badawi should seriously look into it and resolve it the sooner the better.

    IRD should understand and appreciate reciprocity. IRD wants taxpayers to pay taxes in good time, they should in turn refund credit due to taxpayers expeditiously and graciouly without having to harass the taxpayers, to make them visit IRD offices and running around looking for who is who, once so regularly, and make taxpayers write reminders etc…

    IRD wants e-filing of taxes, then also in return IRD should have e-refund of credit due to taxpayers. That is the minimum in fairness. As very often, the PM Abdullah and TPM Najib have said “think out of the box” please.

  8. #8 by Educator on Wednesday, 28 March 2007 - 5:00 pm

    undergrad2 & Libra2, ada jalan pergi ke US?
    My refund is still “dalam proses”!

  9. #9 by tsn on Wednesday, 28 March 2007 - 7:10 pm

    Oi friends, what on earth make you guys compare Malaysia & US, US naik langit dengan kapal USA, we naik langit juga but tumpang Putin’s kapal, also proud & celebrate like nobody business.

  10. #10 by pwcheng on Wednesday, 28 March 2007 - 7:10 pm

    This problem had been there since time memorial. The IRB had spoken many times as promises to make a speedy refund.
    As a matter of fact, for all that is going on in this bolehland, it looks like its a land of the wild where might is right. Fair that they have to be tough when we owe them but when they owe us they do not care two hoots. Many of us will share the same frustration and stress and certainly our empathy with Mr ONG WAI LEONG but that will not change anything. It is our money and why are they keeping them. We do not want any excuse from them anymore.
    Honestly we need a caring government and we must do all we can to kick out this sick government. I hope the people of Machap will send a strong signal to this ailing govt who are nothing more than a bunch of crooks and thieves. That is why they can never be transparent and impossible to be credible.

  11. #11 by susmaryosep on Wednesday, 28 March 2007 - 8:59 pm

    Just to clear the air; the letter I wrote about ia about refunds from tax on dividends, made at source(at corporate rate), whereas the example of US refund is made because of overpayment. I think they require different methods of treatment. Read my letter properly.\

  12. #12 by undergrad2 on Wednesday, 28 March 2007 - 9:07 pm

    The comparison is to give perspective to where we stand in terms of efficiency.

  13. #13 by accountability on Wednesday, 28 March 2007 - 10:40 pm

    at the rate our unaccountable govt is wasting public fund, i do not see any hope for refunds as quick as collections

    want transparency and accountability?
    then >> if govt fines us for late payment, we should fine them back for delayed refunds!

  14. #14 by japankiller on Thursday, 29 March 2007 - 12:33 am

    notice the 2 tiger in our government logo?That is the sign that eat us up..

  15. #15 by chongwah on Thursday, 29 March 2007 - 1:46 am

    It’s tricky when comes to convince ourselves to use Malaysia’s goverment Internet Service. As a IT guy, I do have doubts on the quality of the online program, not even dare to think about the services. But, did change ‘a bit’ of my negative perception on e-gov services. It’s trivial to get the initial password but overall, I rate highly the quality of the site.

    Give e-filing a try? Still thinking… Ok, I am going to toss a coin.

  16. #16 by lupus on Thursday, 29 March 2007 - 4:05 am

    There is a simple solution regarding the IRB slow refund process – why don’t IRB just pay a 8% interest rate on the outstanding money ? Isn’t that fair ?

  17. #17 by tsn on Thursday, 29 March 2007 - 12:07 pm

    Efficiency? Deficiency more appropriate.

    Just be realistic, we never can attain the standard of the western countries.Of course partly is due to our half-past 6 government, in actual fact our society is full of crooks,dishonest citizens are much more than honest citizens. Just imagine the number of people tamper theirs electricity meter reading, probably even can be found among your own circle of friends or relatives.Some of these “meter tamperers” are filty rich people, a banglo house with 20 units of air conditioner.

    Finger pointing to hp6 government is pretty convenient, self-reflection is much more needed now. Our crookness make our daily life more expensive, inconveniet & grumpy.

    Maybe we have to find out the differences of “tax refund procedures” between Malaysia and America/Australia.It looks like these 2 countries are really fast in refunding the “tax refund”
    due to theirs’ tax payers. In crook society extra care must be done otherwise the in-crooks(IRB) and out-crooks(taxpayers) will conspire to sapu all our $. Fast to refund but no $ to refund, even worse.

  18. #18 by K S Ong on Thursday, 29 March 2007 - 12:18 pm

    First of all, I must say Ong Wai Leong’s suggestion is not practical as it involves treatment of corporation taxes paid and individual shareholder’s dividend income which is net of tax (if applicable, as some are tax exempt). It would require a major overhaul of the relevant tax law and procedures to make it workable.

    However, even under the present system, it just needs a more efficient sytem of verification of dividend vouchers and payment of refunds. Where it involves private limited companies, then a further verification with the companies concerned may be necessary to ensure the vouchers are genuine, which might take a longer time. Even then, an efficient system will show itself.

    Generally, our tax department should show their genuine friendliness in correcting obvious errors where for eg. an election for separate assessment would actually result in a disadvantageous position to the taxpayer, without having to go through bureaucratic process. In other words, when assessing returns, treat them as if they were your own instead of finding faults just to penalise the taxpayers. My personal experience was when I declared an omission of my wife’s income (due to poor communication) was duly fined 100% of the extra tax payable. It left me wondering if I could have got away without declaring!
    That is what you get for being honest.

    I am sure all taxpayers would agree that we should have timely annual statements from Inland Revenue Dept. Each time when we receive the statement, it was at least 1 year old and we are left wondering if there were any discrepancies to date.

  19. #19 by kennylow on Thursday, 29 March 2007 - 12:43 pm

    the govt will not change its current taxation system on dividend refund as it benefits in 2 ways. First,i believe that if the shareholder gets the dividend voucher but does not deposit the check for whatever reasons, the unclaimed dividend will be classified as Unclaimed Monies by the investee company and transferred to the govt treasury after 7 years.
    As an illlustration, do go to the link below for the real hassle and red tape if you should forget to deposit your dividend voucher:
    Second, sometimes, in filing your annual income tax return, and you might have misplaced your original voucher or you might not put in your claim for your dividend refund from the IRB if the amount involved is not worth the hassle, the govt will gain again. Multiply this by thousands of taxpayers, it is a lot of monies that the IRB does not have to refund each year. So, why would the Govt fix something if it aint broke? The govt earns if you dont deposit your dividend voucher or if you dont claim for your refund from the IRB!!!

  20. #20 by tiger on Thursday, 29 March 2007 - 2:29 pm

    I am speechless… this is like day light robbery. As usual in Malaysia, the onus is on the rakyat, the blame too if things screw up. However, the credit goes to …. the goverment.

    What amase me is the objective behind this. Going efiling is good but what about e-refund, e-payment or e-statement???

    As usual, we must wait for some major problem before something will be done.

  21. #21 by mybangsamalaysia on Thursday, 29 March 2007 - 7:38 pm

    See…i believe some of you people may have experience in running a company if not at least manage for someone. If a company makes sales and keep chasing the customer day in day out but slow in paying their suppliers……. normally it will be rumuors out there that the company is a bad pay master and may have mismanaged.. the directors are rolling the money of suppliers…. watch out.

    Malaysia government financial position…. watch out. Something is not right.

  22. #22 by susmaryosep on Thursday, 29 March 2007 - 10:52 pm

    You are smart, and you maybe right. But let us hope the Govt is serious about improving its delivery system, then my suggestion will work! By the way, are you from San Diego, USA? :-0

  23. #23 by DarkHorse on Friday, 30 March 2007 - 7:10 am

    It is time to think out of the box. What box??

  24. #24 by DarkHorse on Friday, 30 March 2007 - 7:10 am

    I only know XBox.

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