Proposal of Tax Amnesty Scheme

The Tax Amnesty Scheme provided to taxpayers in the last Budget will expire on 31st May 2018. In that context, I am hereby making a proposal for the Extension of the Tax Amnesty Scheme in the Budget 2018/2019 that will be in the interest of all taxpayers in as much as they are all faced with an ordeal and outstanding debts with the MRA. The purpose of the proposal will enable all the taxpayers in dire situation to gain a new lease on life and thereby allow the MRA to be paid its claims.

On one hand, the taxpayers delayed in paying their taxes and on the other hand, it is crystal clear that they are not in a position to pay the taxes with substantial interest which had resulted in several cases pending with mounting debts at MRA.

Many taxpayers retained my services regarding MRA's Tax Assessment and/or Debts Due inclusive of penalty and interest. I have represented many taxpayers at the MRA Objection & Appeal Department, Assessment Review Committee and the Supreme Court. 

As a Certified Tax Analyst, my goal is to help taxpayers in distress with tax assessment to reach settlement with MRA on a win-win situation. I always settle cases amicably with the MRA except cases which require interpretation of law.

Based on the last year's Budget Tax Amnesty Scheme, some taxpayers have been able to settle their outstanding debts due as at 30th June 2015 with the MRA. However, other taxpayers who had assessment raised and outstanding dues after 30th June 2015, that is, 30th June 2016, 30th June 2017 and up to 30th June 2018 have not benefited from the scheme and they feel that they have been left apart.

The Question

“Why should some delinquent taxpayers be awarded such type of benefits up to 30th June 2015, while other delinquent taxpayers who have same problems have been left apart from 2016 up to 2018?” 

The past three years (2016-2018) have been very difficult for many taxpayers’ businesses and they owe substantial amount of tax plus interest and penalties to the MRA. These taxpayers feel that the amnesty provided for assessment raised and debts due up to 30th June 2015 are unfair to them whereby they, as law-abiding citizens, have paid their taxes on time before, except for the past three years where businesses were down with severe cash flow problems.

The Proposal

(a) Extension of Tax Arrears Settlement Scheme (TASS) for all debts due as at 30th June 2018 payable before 31st May 2019.

(b) Introduction of Voluntary Disclosure Income Arrangement (VDIA) as from 1st July 2018 and ending on 31st May 2019.

(c) Introduction of an Arbitration Dispute Resolution (ADR) at MRA with a government appointed Arbitrator who should be an ex-judge knowledgeable in tax matters.

(d) Introduction of a Prosecution Amnesty Scheme (PAS) which will involve immunity from prosecution for detected offenders by waiving the penalty and interest on pleading guilty and paying the pure tax.

The above amnesty will give the taxpayers an opportunity to check that their tax affairs are up to date and if appropriate, make a disclosure of any potential unpaid tax liabilities to MRA to benefit 100% waiver of penalty and interest. This will also allow more time to some taxpayers who have not been able to abide by the deadline of payment as at 31st May 2018.

Further, I propose that taxpayers using VDIA Amnesty Scheme need not be subjected to a detailed or intrusive forensic review by MRA and must be immune from prosecution provided they make a full and complete disclosure. This voluntary scheme might operate better than any other amnesty.

The introduction of an Arbitration Dispute Resolution will revolutionise the MRA's Dispute Resolution Systems, whereby cases might be settled within three months. This unique initiative might reduce the total time frame for proceedings for each case.

The Conclusion

1. By allowing an Extension of Tax Amnesty up to the year 2019, the Government/MRA will send a strong signal that the party is over for delinquent taxpayers and tax evaders without any discrimination.

2. With the introduction of the Arbitration Panel, the Government/MRA will be calling on all taxpayers to come clean with their tax affairs for the good of their country or face the dire consequences of the law enforcement action by the year 2020.

3. The proposed Amnesty Scheme/Arbitration Panel will improve the incentives to come forward for those who are willing to comply allowing the MRA to focus more resources on those who continue to evade tax.

4. The above tax reforms with one-time Amnesty and a better Arbitration dispute resolution scheme for past disputes will provide an opportunity to finally achieve closure on much pending cases at MRA by waiving of interest and penalties.

5. The amount of tax collected from the Amnesty Scheme/Arbitration Panel will be invested in key government projects and pensions.

To that end, I am making a humble request to the Hon. Minister of Finance to please bring the necessary tax reforms to the Income Tax Act, Vat Act and GRA Act regarding 'Tax Amnesty' in the Budget 2018/2019 to help the taxpayers of this country. The rest, I leave it, for your wisdom and fine sense of judgment.

Shah N Kadall, CFE, FICFA, 

FGAFM, CFIP, CITA, Aff. CILEx

Fellow Certified Forensic Accountant

Academy of Experts MAE (London)