[UPDATED] IRB can now access taxpayers’ bank accounts without warning, permission

KUALA LUMPUR - The Inland Revenue Board (IRB) can now access bank accounts belonging to taxpayers without warning or permission for review or investigations, following the passing of the Finance Bill 2021 in the Dewan Rakyat today. 

The controversial amendments were passed today via a simple voice vote after it was put up for voting by former deputy speaker Datuk Seri Azalina Othman Said, who was chairing the session. 

Under the bill, a new provision will be included in the Income Tax Act 1967. 

This new Section 106A grants powers to IRB to access bank account information for the purpose of making garnishee order applications. 

Garnishee is a process whereby creditors are allowed to collect debts from third parties, where the monies are owed by or belong to the debtor. 

“The director-general (of the IRB) may, by notice under his hand, require any financial institution to furnish, within a specified time in the notice, the bank account information of that person, if any, or the purpose of making an application to court for a garnishee order,” the new section reads. 

However, this only applies where civil proceedings have already been initiated. 

Further, under Subsection (2), financial institutions ordered to furnish the bank account information will not be allowed to disclose to anyone that such a request has been made.

Earlier today, Datuk Ngeh Koo Ham (Beruas-PH), while debating the bill, touched on the importance of banking secrecy.

Ngeh explained that such overreaching legal provisions could cause the public to lose confidence in the finance industry.

He also pointed out that there are already punitive measures in place against errant taxpayers.

“We know the government has a right over taxes which are owed.

“The government has already been given powers to handle such situations, such as barring those who owe taxes from exiting the country,” Ngeh explained.

However, Deputy Finance Minister I Mohd Shahar Abdullah explained that the new provision is needed to ensure smooth garnishee proceedings.

Shahar said, if banks were to inform their account holders of potential garnishee proceedings, it is possible for the debtors to remove all of their monies from the bank.

“This would ensure that the garnishee procedure cannot be carried out, hence the rationale behind introducing the amendment.

“Further, we have already consulted Bank Negara Malaysia before suggesting amendments,” Shahar said.

In a Sin Chew Daily article on December 10, tax expert Koong Lin Loong said that in the past, taxpayers were required to sign a consent form before banks were allowed to furnish relevant information to authorities. 

Further, Koong said, the Personal Data Protection Act 2010 (PDPA), supposedly enacted to protect confidential information, would not come into play when Section 106A is enforced in the future. 

Provisions in the PDPA compel banks to obtain consent from bank account owners before furnishing any information to the IRB. – The Vibes, December 15, 2021