Some essays, some thoughts

A Visit by IRD

One Day my secretary brought me a letter from the authority. Shall I arrange for our Auditors to be present when the IRD call ? she asked in anticipation. I read the letter, it said that some officers from the Inland Revenue Department (IRD) will be paying us a visit regarding the accounts of one of our companies, and that we are entitled to be represented by our Auditors. It is not necessary for our Auditors to be present at this stage, we can deal with the authority ourselves. I said that because I was sure our accounts are properly kept, our Auditors and Tax advisers had done their jobs professionally, and we paid our dues as we should --- no more, no less.

They came early in the morning, it was Thursday, December 22, 1994. After the initial introduction, we allocated the gang of 5 or 6, led by a lady officer, our big conference room to do their job. We gave them whatever records, documents and agreements as required. They pored through the ledgers and files, doing some rather advanced arithmetic especially with reference to a crucial sub-lease agreement. At the end of the day we were ready to discuss. She told me they thought the treatment of our income from the sub-lease agreement was incorrect and our tax computations for the past years might have to be re-computed.

I told her that our Tax computation was done by qualified and licensed professional even though its not an international firm, I believed our Tax Agent had submitted the computations correctly. If the IRD thought otherwise, they could contact our tax agent regarding any discrepancies. In the ensuing exchange of ideas, it was hinted that some firms maybe collaborating with their Auditors and Tax Agent to evade taxes and that the authority was wary of the practice.

My philosophy on Tax matters surprised them. Well, we are happy to pay tax which is rightfully due, I said, we believe that our tax system is actually a very good system for running a country. We will pay whatever should be paid as stipulated by the laws. We will not pay what should not be paid. We know the laws and we abide by the laws.

Perplexed and surprised with my philosophy, they began to voice their discontent on the standards of some of the Auditors, especially those smaller local firms. Oh! We also have international Auditors on our panel, I said, some of our companies are audited by reputable Auditors such as Ernst & Young¡K, she smiled, but the moment I mentioned ¡K Peat Marwick¡K her smile froze, the colour of her face changed from rosy pink to some fairer colours. Shes speechless for quite a while! (I believe there must be some reasons for this reaction, but I wont dare to ask.)

In any event the visit concluded with the note that they would contact to our Tax Agent regarding any short comings if they found any. To-date, two years since the visit, we have not received any notice from the IRD regarding the tax treatments and computations. Endorsing our view of the tax liabilities of that particular company.

If we play the game by the rules and are honest to ourselves, we can stand up to the test, any time.


- Ir Michael Hii, 1996


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