Proposed tribunal must be able to handle direct, indirect tax disputes — Assoc

KUCHING (Jan 26): The Small and Medium Enterprises Association of Malaysia (Samenta) is in favour of the proposal by former finance minister Lim Guan Eng to establish a Tax Tribunal.

Its president Datuk William Ng said that Samenta members were reporting a surge in aggressive tax audits as Malaysia moves into the full implementation of e-invoicing and stricter compliance, which places undue pressure on SMEs already struggling with tight liquidity and rising operational costs.

He added the current dispute resolution mechanism is insufficient, costly and time-consuming for all parties and forces poorly-equipped SMEs to defend themselves against powerful, well-resourced agencies.

“To better serve the 1.2 million micro, small and medium enterprises (MSMEs) in Malaysia, the tribunal must be a single unified body to handle both direct and indirect tax disputes.

“SMEs have to navigate two separate legal channels, namely the Special Commissioners of Income Tax (SCIT) and Customs Appeal Tribunal (CAT). An SME should not have to fight two different government agencies using two different sets of lawyers for the same business period.

“On disputes involving sums below RM100,000, the proposed tribunal’s decision must be final and binding on both the taxpayer and the Inland Revenue Board or Customs Department,” he said in a statement yesterday.

Ng said that SMEs could not afford years of “wars of attrition” in the High Courts, and making the tribunal’s decision binding for smaller sums would provide SMEs with finality and prevent the government from using its vast resources to outspend SME owners in court.

“The current ‘Pay First, Dispute Later’ policy, or Section 103 of the Income Tax Act, s a relic that is killing businesses. I propose that the collection of additional taxes and penalties be automatically suspended the moment a Notice of Appeal is filed with the tribunal, provided it is done within 30 days of the assessment.

“We must stop tax-induced bankruptcies where SMEs are forced to close because their working capital is seized for assessments that are later proven incorrect,” he said.

“The tribunal must be a forum of fact, not technicalities, which means arguments must be presented in plain language, free from legal jargon that disadvantages SMEs who cannot afford tax agents or lawyers,” he said.

Ng said that taxation should be a contribution to nation-building and that while businesses must and should pay taxes and with no room for tax evasion, SMEs must be given a fair opportunity to dispute findings they believed were unjust.