Malaysia - Special Voluntary Disclosure Programme for direct taxes re-introduced

The Malaysian government first introduced a Special Voluntary Disclosure Programme (SVDP 1.0) in the 2019 Budget, under which businesses and individuals were given an opportunity to voluntarily disclose any unreported income and settle the tax arrears with the Inland Revenue Board of Malaysia (IRBM) by paying a reduced penalty of 10% or 15% of the tax liability. Nearly 290,000 taxpayers participated in SVDP 1.0, which was in effect from 3 November 2018 to 30 September 2019.

In the re-tabled Budget 2023 on 24 February 2023, the government announced the re-introduction of the SVDP (now SVDP 2.0) to incentivise taxpayers to come forward and disclose underpaid or unpaid taxes as part of the government’s efforts to increase tax collections (the SVDP also applies to indirect taxes—see the article on this topic). Details of SVDP 2.0 were released by the IRBM in June. The main difference between SVDP 1.0 and SVDP 2.0 is that the IRBM will not impose any penalties under SVDP 2.0. This is a rare opportunity for taxpayers to come forward to declare their income and settle all direct tax liabilities without being penalised for any wrongdoing.

The salient features of SVDP 2.0 are summarised below:

Based on the spirit of voluntary disclosure, the IRBM has indicated that it will accept information disclosed by taxpayers under SVDP 2.0 in good faith and will not conduct audits on taxpayers for the YAs for which voluntary disclosure has been made. Taxpayers should take this opportunity to review their tax compliance records and determine whether voluntary disclosure should be made or would be appropriate.

Koo Kian Ming
BDO in Malaysia