Illegally yours, mine or whose?

I read with interest with regards to the Finance Minister’s comment relating to early success in combating illicit money.
Early success’ by special taskforce on illicit outflows
Speaking to reporters after launching Bank Negara Malaysia’s Financial Blueprint 2011-2020, Najib (right) said the taskforce has especially been successful in curbing one source of leakage – tax evasion.
Najib said tax revenue for 2011 is expected to be a whopping RM22 billion more than last year,
Najib was commenting on a study by financial watchdog Global Financial Integrity (GFI) which found that Malaysia had lost an astounding RM150 billion in 2009 alone through illicit means.
The PM, who is also finance minister, added that the haemorrhage has however not affected the domestic economy.

The Finance Minister has to be more specific in his explanation.  Is the RM22billion entirely from previously illicit sources, or partially from known, existing sources?
According to theedge, the higher tax revenue is due to “better prospect”, not recovery of previously illicit and unchecked leakages.

Let’s take RM150billion illicit money as a base case. Given the maximum tax rate of 25%, plus 10% late penalty and also tax evasion penalty as follows:
"If a person fail to furnish a return (section 77(1) of Income Tax Act, 1967) or fail to notify the IRB on his chargeability (sec 77(3)), then the offender can be make to pay up to 3 times the amount of tax payable." - extracted from one of the helpful Malaysia tax advise webpages
Then by all means, that RM150billion illicit money could potentially result in tax revenue of up to RM450billion! (or basic 25% @ RM150 billion RM37.5 billion) So what is this RM22billion about? Better business performance or more tax investigation work by IRB on existing known sources?

You can't use the same piece of good news twice, especially for different purposes.
Tax professionals in the know will tell you that IRB has taken a keen interest into transfer pricing practices of multi-national corporations in Malaysia. Tax professionals and accounting managers are coping hard to furnish years of gross margin and operating margin information requested by IRB.
Therefore I am quite sure much of the RM22 billion is either due to “better prospects” or big wins by IRB on existing tax files.
I would be very keen, however, to know if any part of the RM22billion is derived from the following incidences:

1)      “overpayment and not corruption” transactions
Every year, the Auditor General gives us the horror stories on how tax payers’ money are squandered by civil servants who do not exercise same level of prudence with money as real taxpayers who manages company and personal budgets.
MACC: No graft involved in purchase of binoculars
PUTRAJAYA: There were no financial irregularities involved in the Marine Park Department’s purchase of two pairs of night vision binoculars which cost 10 times more than the market price, MACC deputy commissioner Datuk Shukri Abdul said.
The Auditor-General’s Report 2010 had stated that the binoculars were 2,805% or RM56,350 more than the estimated market price of RM1,940.
The names of the companies reaping such huge and unethical profits are never made clear to the public. It would be interesting for us to know if these ultra super profiteers are paying taxes at all.

2)      The VVIPs

Negri MB’s RM10m tip of hot money iceberg
KUALA LUMPUR Dec 4 — When aides to the Negri Sembilan mentri besar sent RM10 million to London via a money changer recently, they were just following in the footsteps of many who have sought the hawala system to move ill-gotten gains and wealth to more secure locations.

The Malaysian Insider understands that Bank Negara Malaysia (BNM) is unlikely to charge any of them because the list contains a number of prominent Malaysians, including top businessmen, chiefs of some government-linked companies (GLCs), politicians and several ordinary people either sending money for their children's needs abroad or just plain distrustful of Malaysia's future.

And the list is too long as BNM has discovered that these well-heeled tycoons, cutting across all racial lines, and the rest have been using the network of Indian-Muslim money changers across the world to remit millions of ringgit every month to offshore accounts.

The case came out in the open when Batu MP Chua Tian Chang revealed that Negri Sembilan MB Datuk Seri Mohamad Hasan had used Salamath Ali money changers in KLCC Suria to send RM10 million to London. The money changer lost its licence and its shoplot is now closed, ostensibly for renovations.

Chua, who is also PKR strategy chief, told The Malaysian Insider he has access to a list of high-profile personalities who used the money changer transfer services, also known as hawala as practised in India.

He claimed among them is a senior minister's wife who allegedly had money transferred to her overseas and a major GLC chief who apparently moved £3.2 million (RM18 million) worth of funds to London.

But Chua said that he will not reveal the names until he is "absolutely sure".

“This is only the tip of the iceberg," Chua said.
If Tian Chua is saying only the tip of the ice berg is barely identifiable; then the RM888billion lost over the decade could be a possible scenario. This mean that Malaysians could have forgone either 25% of RM888 billion, i.e. as tax revenue amounting to RM222billion or even RM2.7 trillion if punitive measures resulted in 3 times the original amount is detected as tax evasion.
How many hospitals, roads and public facilities could have be built then?
How much of the “official” national debt plus Hutang Persekutuan Dalam Negeri totaling RM430billion would be eliminated, as if they were necessary to be there in the first place?
And one wonders what else we could have done with those lost resources.
Explain RM888b illegal funds leak, DAP tells BN
By Boo Su-Lyn January 23, 2011
KUALA LUMPUR, Jan 23 — The DAP urged Barisan Nasional (BN) today to come clean on Malaysia’s illicit money outflows totalling US$291 billion (RM888 billion) from 2000 to 2008.
Malaysia had the fifth-largest amount of illegal money outflows among developing countries during that period, according to a report by US-based financial watchdog Global Financial integrity (GFI) released this month.
Prime Minister Datuk Seri Najib Razak declined to comment on the matter when asked last Friday but instead said Bank Negara would provide specific remarks.
Tun Dr Mahathir Mohamad and Tun Abdullah Ahmad Badawi were the successive premiers and finance ministers during that period.

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