How firms cheat on tax returns

Some companies go to great lengths to try to cheat on their tax returns by creating documents to show a higher expenditure, according to Inland Revenue Board audits.

One of the devious ways is when the companies understate their sales receipts to show a reduced profit in their financial statements.

Others go to the extent of producing salary receipts of non-existent workers while there are companies which opened invoices for directors taking their families for fictitious holidays.

IRB chief executive officer Tan Sri Zainol Abidin Abdul Rashid said its audit teams have come across an increasing number of companies using various ways to jack up their expenses.

“We have no choice but to fine such companies for under-declaring their income tax,” he said in an interview.

He said some audit firms also tend to close one eye on the companies’ deceitful ways due to competition.

“When our audit teams caught up with them, we will fine them for the malpractice and offences.

“It is unfortunate that the appointed auditors are dictated by the companies engaged by them,” he said.

Zainol Abidin said the public should not fear IRB’s nationwide tax audits and business surveys as they were the only ways to verify the accounts declared by companies.

“We want to carry out a tax audit on each taxpayer annually but this is impossible because of the lack of manpower,” he said.

“So, we are happy if we can do an audit every three to five years.”

Zainol Abidin assured taxpayers that they would not be penalised if found to have improperly filed their tax returns during the audit checks.

However, they could be fined for not declaring their income properly, he said.

“The tax audit is also a way for tax officers to communicate with taxpayers as we are believe in being helpful to our customers,” he added.