The government is considering a proposal to streamline Malaysia’s national revenue administration through a unified collection system, including the possible establishment of a Single Tax Agency (STA).
The proposal would bring together the tax collection functions currently handled separately by the Customs Department and the Inland Revenue Board (IRB). The matter was discussed during an enforcement and tax compliance meeting held in June.
Sources familiar with the discussions told Berita Harian that representatives from key Finance Ministry agencies, including the Treasury, Customs Department and IRB, attended the meeting, alongside representatives from the World Bank.
At present, the Customs Department and IRB operate under separate administrative, collection and enforcement structures. A unified approach could potentially reduce overlapping responsibilities, improve collection efficiency and cut administrative costs.
The proposed system could also make it easier for taxpayers and businesses to meet their compliance requirements by simplifying existing procedures and reducing the administrative burden.
A source said the STA proposal was put forward by the World Bank and discussed among national revenue agencies, but stressed that no final decision had been made on whether the functions of the two agencies would ultimately be restructured.
“The proposal is being reviewed by the Finance Ministry. Initial discussions have taken place and, if agreed to by the ministry and approved by the relevant authorities, implementation will proceed,” the source said.
The source added that there was currently no timeline for the government to make a final decision on the proposal.
The World Bank had previously highlighted the need to streamline Malaysia’s revenue administration in its Malaysia Economic Monitor June 2015 – Transforming Urban Transport report.
According to the report, revenue collection could be coordinated through a single window even without establishing a single agency. Such an approach could help minimise operational overlaps and administrative costs while lowering compliance costs for businesses.
The report also said a more integrated revenue administration system could improve management by eliminating duplicated functions and simplifying procedures for taxpayers.
A more uniform administrative structure could further benefit businesses by reducing the time and resources required to fulfil tax compliance obligations.
