For those living in Malaysia, you will have to be at some point in your adult life, familiar with the Inland Revenue Board of Malaysia (LHDN). As one of the government’s most crucial sources of revenue collection, LHDN is tasked to oversee the administration, assessment, enforcement and collection of income tax throughout the country.
LHDN doesn’t need your permission to access your bank account details
In the past, the Inland Revenue Board was required to obtain the permission of an individual in order to gain access into their bank accounts for purposes of investigation, should concerns regarding tax evasion arise. However, according to The Vibes, that is no longer the case. In a new amendment that was announced under the passing of Finance Bill 2021 in Dewan Rakyat yesterday (16th December 2021), LHDN no longer requires any permission from you to access your bank account.
Passed under a simple voice vote chaired by former deputy speaker Datuk Seri Azalina Othman Said, the new provision, Section 106A, will be included under the Income Tax Act 1967.
What this means for you is that should the need arise, the Inland Revenue Board may bypass taxpayers completely in order to obtain their bank account information, as explained by Koong Lin Loong of Reanda LLKG International Chartered Accountants in speaking with Ringgit Plus. As of right now, this was said to have been done for the purposes of making garnishee order applications.
A garnishee order is explained as a means for creditors to collect debts from third parties, whereby the monies are owned or belong to the debtor.
Banks are legally forbidden from telling you that LDHN have accessed your accounts
This is on top of the fact that banks are now legally forbidden from disclosing such requests from the Inland Revenue Board to taxpayers if it occurs. Which means you won’t even realise that LHDN have accessed your bank details. Banks who refuse to comply to the request by LHDN, or reveal such requests to taxpayers could be liable of facing a fine amounting to anywhere between RM200 to RM20,000, as well as a maximum jail time of six months.
More worryingly, Malaysia’s Personal Data Protection Act (PDPA) will not be applicable to Section 106A, which has raised data privacy concerns.
But for this information to be acquired by LHDN, a civil proceeding needs to first be initiated against an individual and a judgement has to be obtained before any financial institutions are allowed to reveal any bank account information under this new provision, according to SoyaCincau.
Deputy Finance Minister I Mohd Shahar Abdullah states that such measures are necessary in order to ensure that any garnishee orders can be carried out without incident, and adds that should taxpayers be alerted of requests from LHDN to access their bank account details, they may choose to empty out their monies ahead of time.
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