The Royal Malaysian Customs Department (JKDM) has once again launched the highly anticipated " Voluntary Disclosure Program" (VDP), aimed at addressing indirect tax issues under specific enactments. For taxpayers, this is a rare opportunity, so let's delve into the incentives and eligibility criteria.

Program Overview

The Malaysian government officially announced the re-launch of the "Voluntary Disclosure Program" in the February 24, 2023, Budget 2023. This program will cover mistakes or omissions related to indirect taxes were previously unknown or undiscovered by the RMCD. These enactments include the Sales Tax Act 1972 (ACJ 1972), Service Tax Act 1975 (ACP 1975), Goods and Services Tax Act 2014  (ACBP 2014), Tourism Tax Act 2017 (TTx 2017), Sales Tax Act 2018 (ACJ 2018), and Service Tax Act 2018 (ACP 2018).

List of Incentives

The "Voluntary Disclosure Program" offers the following incentives to eligible taxpayers:

1. 100% Penalty Remission: Taxpayers who fully settle the undeclared taxes during the period from 6 June 2023 to 31 May 2024, will be granted a 100% penalty remission.
2. No Tax Audit: The taxable periods declared under this program will not be audited by the RMCD’s Compliance Division at the zone / state level. For taxable periods that are not declared under the program, audits may be conducted starting from 1 June 2024. While for taxable periods after 28 February 2023, audits may be conducted starting from 1 June 2025.
3. Instalment Payment: Taxpayers can opt for instalment payment to settle their taxes. During the program period, taxpayers can adhere to the specified instalment payment plan.
4. Voluntary Tax Disclosure: Taxpayers can voluntarily disclose unreported taxes and unpaid tax amounts to ensure compliance. 

Eligibility Criteria

The program applies to taxpayers who meet the following conditions:

1.Any person who have registered and:

• Submitted NIL return for a return in which taxes should have been declared and paid;
• Failed to submit a return despite taxes being due;
• Tax returns have been submitted, but there are under declaration and underpayment of tax; or
• Imposed tax on goods / services that are not taxable, but not paid it to RMCD

2.Any person who is liable to register but failed to registered or paid taxes.

3.Any person who acquires imported taxable service under the Goods and Services Tax Act 2014 or Service Tax Act 2018 but have not accounted for tax payable to RMCD 

Non-Applicability 

Certain taxpayers are not suitable to participate in the "Voluntary Disclosure Program," including:

1. Any person who is currently under audit & investigation: Taxpayers currently undergoing Customs Department audits are not eligible to participate in the program.
2. Any person who have received Bill of Demand (BOD): Taxpayers who have already received Bill of Demand (BOD) from the Customs Department are not eligible to apply.
3. Cases already submitted for court proceedings: Taxpayers with tax issues already involved in court proceedings are not eligible to participate in the "Voluntary Disclosure Program."