The plan was part of the 2020 Budget tabled by Finance Minister Lim Guan Eng on Oct 11.

Independent tax expert Veerinderjeet Singh told FMT the TIN is essentially an automatically assigned tax number.

“Internationally, TIN is a term used for a tax file number. But instead of requiring a person to come forward and obtain a tax file number, the Inland Revenue Board (LHDN) will allocate a tax number automatically,” he said.

According to Institute for Democracy and Economic Affairs senior fellow Carmelo Ferlito, a similar tax code known as the fiscal code is used in Italy.

Like TIN, the fiscal code is automatically assigned at birth, based on name, date and place of birth.

“Italy has its own NRIC, but we are almost always asked for our fiscal code,” he said.

So what might be the benefits of TIN?

If the plan is implemented in such a way that requires a TIN for both sides of a transaction, Ferlito said it could allow LHDN to cross-check purchases and monitor for potential tax evasion.

Veerinderjeet meanwhile said requiring both buyers and sellers to state their TIN in agreements or invoices could help boost awareness about taxes and compliance behaviour.

In Italy, Ferlito said, everyone has a fiscal code but people are only taxed if they generate an income.

“This income still needs to be declared with a tax return, so the code per se does not signal any information,” he added.

“The code usually does not replace the tax law. If you are exempted, you remain exempted.”

When asked if TIN might replace MyKads in the long run, Veerinderjeet said probably not.

“Foreigners without NRICs need to be taxed too,” he said. “If you look at the matter as a whole, it may be best for LHDN to allocate a separate tax file number, which would be the TIN.”

On the other hand, he said, the existing tax numbers issued by LHDN could be phased out and replaced by TIN.