Civil Suit taken by Inland Revenue Board of Malaysia (IRBM) towards companies is to ensure the judgment/command has been made for the companies to pay tax arrears when normal procedure to collect tax failed. Companies tax arrears (net amount of Receivable Account) for the year ended 2013 is RM4.766 billion (56.55%) out of total tax arrears amounting to RM8.429 billion. While in 2014, companies tax arrears is RM4.365 billion (53.08%) out of RM8.224 billion.
An Audit performed between May until July 2015 in Cheras Branch, Wangsa Maju Branch and Large Taxpayer Branch located in Jalan Tunku Abdul Halim, Kuala Lumpur. The audit revealed that IRBM has taken appropriate action in distributing companies civil suit files to all IRBM branches starting Januari 2014 to enable prompt action taken for cases involved. However, evaluations conducted in 3 IRBM‟s branches found that the management of civil suit was less satisfactory due to weaknesses as follows:
i. IRBM‟s Civil and Litigation Department performance has implemented in 2014. However, the performance cannot be measured accurately as the data produced from the 3 branches were differ from the Revenue Collection Department (RCD) reported data;
ii. Non-compliance of work procedures involving: delay in registering 140 out of 312 summons (44.9%) in court from 10 to 880 days amounting to RM113.94 million; delay in delivering 108 out of 312 summons (34.6%) to companies from 2 to 128 days amounting to RM95.50 million; no action taken after judgment was obtained towards 29 cases amounting to RM12.44 million; delay in delivering 17 out of 312 Notice of Demand (5.4%) from 5 to 1,361 days amounting to RM79.10 million and no action taken to deliver 32 Notice of Demand (10.3%) towards companies up to 1st July 2015 amounting to RM5.56 million; and winding up action is not taken towards 3 companies who failed to pay the remaining claims, and
iii. no action taken towards 7 companies which unable to obey the tax installment amounting to RM634,810 and submission of bad checks for tax installment amounting to RM941,763.