In the 2020 Budget Speech, Finance Minister, Lim Guan Eng, announced the plan to merge the Special Commissioners of Income Tax (“SCIT”) and the Customs Appeal Tribunal (“CAT”) into the Tax Appeal Tribunal (“TAT”). This is being done with the aim to “improve efficiency of taxpayer appeals” and is targeted to come into effect in 2021.
Comments
At a time when a record number of appeals are being filed against the tax authorities, this proposal warrants serious consideration. Taxpayers are increasingly facing mammoth tax assessments from ever more aggressive tax authorities. The Courts are the last bastion to protect the rights of taxpayers.
Currently, there are 2 issues plaguing taxpayers:
All of this leaves taxpayers with a large bill of taxes to be paid without a speedy resolution of the dispute with the tax authorities. This has led taxpayers to seek alternative remedies such as filing an application for judicial review at the High Court, which is quicker and offers more remedies to taxpayers. However, the Courts are reluctant to allow judicial review proceedings since an alternative remedy under the law exists. The Courts will usually only allow judicial review in exceptional circumstances.
Whilst the proposal for the merger is supposed to be aimed at increasing efficiency, it is likely not to have the impact desired.
Instead of speeding up the resolution of tax appeals, now Customs cases may end up being slowed down. This is unless the new TAT is given additional and adequate resources to deal with the workload.
The proposal also does not solve the issue of payment of taxes. Taxpayers will still have to pay the taxes first and wait for their appeals to be heard. In this regard, the TAT should at the very least be given the power to grant a stay against payment of taxes in exceptional cases.
Until these issues are resolved, taxpayers will keep going to the High Court for judicial review instead of going to the tax tribunals.
Contributed by:
Vijey M. Krishnan (Partner)
(T): 603 – 2632 9868
(E): mkvijey@rdl.com.my
William Wong (Senior Associate)
(T): 603 – 2632 9905
(E): williamwong@rdl.com.my
Nicholas Mark Pereira (Senior Associate)
(T): 603 – 2632 9911
(E): nicholaspereira@rdl.com.my