The Compliance Management Division of the Royal Malaysian Customs Department (“RMCD”) has officially launched a new audit approach known as the Compliance Verification Audit Programme or Audit Verifikasi Pematuhan (“AViP”). The focus of this new initiative is to strengthen tax compliance based on awareness, education and facilitation. The programme encourages taxpayers to voluntary disclose any non-compliance through self-assessment.
Based on details shared by RMCD during the official launch, we have summarised the key points of the AViP below:
- The AViP covers all areas of indirect taxes, duties and levies under the purview of RMCD such as Sales Tax, Service Tax, Customs Duties, Excise Duties and Tourism Tax.
- Taxpayers selected/ subject to audit by RMCD can request to participate in AViP.
Taxpayers not under audit but have underpayment of taxes, duties and/ or levies can also approach RMCD to request to participate in the AViP.
- Taxpayers who participate in the AViP are allowed to self-calculate and voluntarily disclose any underpaid taxes, duties and/ or levies for a period of up to six (6) years. Hence taxpayers are encouraged to take a proactive approach and conduct a detailed health check.
- RMCD will conduct minimal checking (a few taxable periods) on the taxpayers.
- If there is no non-compliance, a verification audit compliance certificate will be issued.
- If there are areas of non-compliance, a round table discussion will be conducted and a Voluntary Disclosure agreement form will be issued.
Thereafter, RMCD will issue a Voluntary Disclosure eligibility letter.
Depending on the areas of non-compliance, supplementary returns such as the SST-02, DST-02 and TTx-03 Returns would need to be submitted by the taxpayers for the affected taxable periods. For Post Clearance Audit matters, taxpayers would need to self-calculate and declare the underpaid duties and/ or taxes.
- The benefits of participating in the AViP are:
- Remission of 100% penalty if payment is made within 6 months from the date of disclosure
- Remission of 50% penalty if payment is made after 6 months but not more than 12 months from the date of disclosure
- Option to pay the bill of demand issued by installments
- No compound will be imposed
The AViP is an opportunity for taxpayers to rectify any past discrepancies and ensure compliance moving forward, whilst benefitting from the penalty remission offered by RMCD. As one of the objectives of AViP is to encourage self-compliance, we understand that RMCD would prefer taxpayers to perform a thorough health check on their businesses and thereafter come forward to voluntary disclose any non-compliance via the AViP.
