The Prime Minister, Datuk Seri Abdullah Ahmad Badawi, in his capacity as Finance Minister should direct the Inland Revenue Board to stop invoking Income Tax Act Section 104 barring Malaysians from leaving the country for failing to pay income tax for business, tours and holidays when they have every intention of returning and not absconding from the country, and to seek the advice of the Attorney-General.
In her interview with New Sunday Times, the Chief Executive Officer and Director-General of Inland Revenue Board, Hasmah Abdullah advised 39,867 people who had been blacklisted as tax defaulters that they are barred from leaving the country for failing to pay income tax.
Holiday-makers who bought tickets at the recent Matta fair to go overseas are advised to visit the Inland Revenue Board before they board the plane.
This is most ludicrous and smacks of harassment and even blackmail — something which should not be associated with the public service.
Hasmah pointed out that under Section 104 of Income Tax 1967 (see below), individuals — locals or foreigners — would not be allowed to leave the country if they had not settled their income tax.
I believe that when Parliament passed Section 104 of Income Tax Act 1967 forty years ago, the intention was to prevent individuals, whether locals or foreigners, from evading income tax by absconding from the country — rather than to restrict their business or spoil their holidays plan.
I do not believe Parliament ever intended to prevent Malaysians with income tax problems from going to Singapore, Thailand or other overseas country whether for holidays or business.
I would therefore contend that Section 104 should only used to bar an income tax defaulter from leaving the country if he is likely to abscond to another country to evade payment — and not to be used all and sundry against everyone of the 39,863 defaulters who want to go overseas for holidays, tours or business with every intention of returning.
The Attorney-General should be asked to advise the Cabinet whether Section 104 should be given such a restricted meaning by the Income Tax Board, as 40 years after the enactment of the Income Tax Act in 1967, overseas travel have become commonplace especially in the era of globalization and the advent of budget airlines that there should be no unnecessary restrictions for freedom of travel, except in the specific case where the Income Tax Board have reason to believe that a defaulter is likely to abscond abroad to evade tax payment.
Income Tax Act 1967
Section 104. Recovery from persons leaving Malaysia.
(1) The Director General, where he is of the opinion that any person is about or likely to leave Malaysia without paying–
(a) all tax payable by him (whether or not due or due and payable);
(b) all sums payable by him under subsection 103(3), (4), (5), (6), (7) or (8); and
(c) all debts payable by him under subsection 107A(2) or 109(2) or 109B(2),
may issue to any Commissioner of Police or Director of Immigration a certificate containing particulars of the tax, sums and debts so payable with a request for that person to be prevented from leaving Malaysia unless and until he pays all the tax, sums and debts so payable or furnishes security to the satisfaction of the Director General for their payment.
(2) Subject to any order issued or made under any written law relating to banishment or immigration, any Commissioner of Police or Director of Immigration who receives a request under subsection (1) in respect of any person shall take or cause to be taken all such measures (including the use of reasonable force and the seizure, removal or retention of any certificate of identity and any passport, exit permit or other travel document relating to that person) as may be necessary to give effect to it.
(3) The Director General shall cause notice of the issue of a certificate under subsection (1) to be served personally or by registered post on the person to whom the certificate relates:
Provided that the non-receipt of the notice by that person shall not invalidate anything done under this section.
(4) Where a person in respect of whom a certificate has been issued under subsection (1)–
(a) produces a written statement signed on or after the date of the certificate by the Director General or an authorized officer to the effect that all the tax, sums and debts specified in the certificate have been paid or that security has been furnished for their payment; or
(b) pays all the tax, sums and debts specified in the certificate to the officer in charge of a police station or to an immigration officer,
the statement or the payment, as the case may be, shall be sufficient authority for allowing that person to leave Malaysia.
(5) No legal proceedings shall be instituted or maintained against the Government, a State Government, a police officer or any other public officer in respect of anything lawfully done under this section or subsection 115(2).
(6) In this section–
“Commissioner of Police” includes a Chief Police Officer;
“Director of Immigration” means the Director of Immigration in Sabah, Sarawak or West Malaysia;
“immigration officer” means a public officer having official duties in connection with the control of immigration into Malaysia or any part of Malaysia.