TAX ADMIN

• Inland Revenue Board Malaysia (IRBM)


  • Acts as an agent to the government and provides services in administering, assessing, collecting and enforcing payment of various taxes
  • Advises the government on matters relating to taxation and liaises with appropriate ministries and statutory bodies
  • Participates in or outside Malaysia in respect of matters relating to taxation
  • Performs such other functions as are conferred on the Board by any other written law
• Self-Assessment System (SAS)


  A system whereby taxpayers are required by law to determine their taxable income, compute their tax liability, and submit tax returns based on tax laws, policy and guidelines issued by IRBM
• Chargeable persons - taxpayers

  • Individuals
  • Companies and bodies of persons
  • Company in liquidation
  • Incapacitated person
  • Non-residents
  • Deceased person
  • Trust body
• Responsibilities of an individual taxpayer

  • Register as a taxpayer (if liable)
  • Obtain and complete Income Tax Return Form with correct disclosure
  • Submit the completed Income Tax Return Form not later than 30 April of the following year and not later than 30 June of the following year if the taxpayer derives business income
  • Comply with tax installment payment instruction (Employment: Monthly Tax Deduction (MTD) / Business: 6 Bi-monthly installments)
  • Check balance of tax payable and pay the balance of income tax payable (if any) within the stipulated time
  • Keep and retain the documents / records for 7 years
  • Inform any changes of mailing address within 3 months from the date of change to avoid any penalty
  • Co-operate with IRBM
  • In the case of a foreigner employed in Malaysia, he/she must give notice of chargeability to the nearest office within two months arrival
• Responsibilities of employer

  • Submit Form E to IRBM not later than 31 March of the following year
  • Submit Form CP8A(EA) or CP8C(EC) not later than 28 February of the following year
  • Submit notice of commencing employment to IRBM not later than 30 days from the date of commencement employment using Form CP22
  • Submit notice of cessation of employment or cessation by reason of death to IRBM not less than 30 days before the cessation of employment or not more than 30 days after being informed of the death of the employee using Form CP22A for an employee in private sector or Form CP22B for an employee in public sector
  • Submit notice of employee intends to leave Malaysia for a period exceeding three months to IRBM not less than 30 days before expected date of departure using Form CP21
  • Retain money upon cessation of employment, cessation by reason of death or leave Malaysia for more than 3 months with no intention of returning at least 90 days after the IRBM receives notice of cessation
  • Make MTD from employee's remuneration based on either the Schedule of MTD or the computerized calculation method and remit such deduction to IRBM on or before 15th day of the following month
• Tax administration cycle


  1. Return

  2. Assessment

  3. Appeal

  4. Collection

  5. Recovery
• Types of return


  • BE (Resident individuals without business income)
  • B (Resident individuals with business income)
  • M (Non-resident individuals without business income)
  • M (Non-resident individuals with business income)
  • C (Companies)
  • CI (Co-operatives society)
  • P (Partnership)
  • T (Trusts, deceased person, club, association, societies)
  • E (Employer)
• Assessment


  A notice in writing issued by IRBM to the chargeable person stating the amount of income tax payable
• Types of assessment


  • Original
  • Reduced
  • Additional
  • Composite
  • Increased
  • Advanced
  • Protective
• Original assessment


  The assessment made in accordance to the particulars provided by taxpayer or his agent in the relevant return
• Additional assessment


  Additional assessment may be raised by IRBM due to omission of certain income, additional income not taken into account, or tax refunded by error of fact/law
• Protective assessment


  Assessment issued to avoid the assessment being time barred due to the 5 years time limit
• Increased assessment


  Issued when there is an issue in dispute and taxpayer has reached an agreement with the Director General during the review of assessment, or the Special Commissioner or the Court had decided the issue in dispute and resulted in an increase in the tax payable
• Reduced assessment


  Where there is an appeal against an original assessment or additional assessment, and the taxpayer reaches an agreement with the Director General during the review of assessment or wins the case through appeal to Special Commissioner or court decision
• Advanced assessment


  The Director General of IRBM is empowered to assess the tax in advance to prevent loss of revenue to the Government
• Composite assessment


  May be raised when the taxpayer makes default in furnishing a return, fails to give notice of chargeability, makes an incorrect return by omitting or understating any income, or gives any incorrect information affecting his own chargeability
• Once a composite assessment is issued, the taxpayer is not allowed to appeal to Special Commissioner. It would be final and conclusive.
• Situations where assessment will become final and conclusive

  • No notice of appeal made against the assessment within the time specified
  • No application for extension of time for appeal
  • Agreement has been reached between the Director General and the taxpayer in an appeal
  • A court has determined / make a decision on appeal and there is no right for further appeal (in the case of increased assessment)
  • Taxpayer dies before hearing of appeal starts /completed and there is no request made to proceed with hearing by his representative
• Appeal procedures


  1. Taxpayer: Under S99(1), ITA 1967, taxpayer dissatisfied with the deemed notice of assessment or additional assessment should write to tax authorities to make an appeal

  2. Director General of IRBM: When taxpayer appealed on an assessment, the Director General may review before forward it to Special Commissioner. Upon review, the Director General may request for any books, documents related to the assessment, summon any person / examine person to attend on oath, come to an agreement in writing with the taxpayer regarding the tax payable, or come to an oral agreement with the taxpayer

  3. Special Commissioner: If the Director General fails to reach an agreement with the taxpayer, the case may be forwarded to Special Commissioner. The Special Commissioner will issue a Deciding Order either to confirm or discharge the assessment.

  4. High Court and Court of Appeal: If taxpayer or the Director General is dissatisfied with the Deciding Order, an appeal may be taken to High Court and Court of Appeal
• For each year of assessment, appeal has to be done via submission of four copies of Form Q stating detailed ground of appeal, issues to be trial, date and amount of tax payable as stated in Form JA, and relevant documentation of evidence related to issues to be trial.
• When appeal was not made within 30 days from the date of notice of assessment, taxpayer may at any time make a written application using Form N in 2 copies for an extension of time to appeal.
• Tax recovery procedures


  1. Forward the case to SP Comm if the DG fails to reach an agreement with the taxpayer

  2. A written notice will be served to inform the taxpayer
• SP Comm


  Appointed by YDP Agong
• SP Comm


  • Quorum is three, at least one must be a person with judicial or legal experience
  • Will issue a Deciding Order either to confirm or discharge the assessment
• Appeal procedures


  If taxpayer or the DG is dissatisfied with the Deciding Order, an appeal may be taken to High Court and Court of Appeal
• Form Q submission


  1. For each YA, appeal has to be done via submission of four copies of Form Q stating: Detailed ground of appeal

  2. Issues to be tried

  3. Date and amount of tax payable as stated in Form JA

  4. Relevant documentation of evidence related to issues to be tried

  5. Signed by directors of company or taxpayer
• Appeals which are out of time

  When appeal was not made within 30 days from the date of notice of assessment, taxpayer may at any time make a written application using Form N in 2 copies for an extension of time to lodge an appeal
• Methods to collect tax

  • Resident individuals with business income - 6 Bi-monthly installments
  • Resident individuals without business income - Monthly tax deduction system
• 6 Bi-monthly installment


  1. IRBM will issue the notice of instalment payment (CP500) which states the date of payment and amount of income tax payable

  2. The estimate of ITP for YA2019 is based on ITP for YA2018

  3. There will be 6 bi-monthly instalments commencing from March 2019 to January 2020

  4. Taxpayer must enclose the postal remittance slip when remitting the bi-monthly instalment to the IRBM
• Variation of 6 Bi-monthly installment

  1. Taxpayer can make application using the form CP 502 not later than 30 June for each YA to vary the amount of instalment

  2. With the variation, the balance of ITP would have to spread over the remaining 4 bi-monthly instalments

  3. When instalments payment varied, an automatic penalty will be imposed if the final ITP exceeds the total instalment payments by more than 30%

  4. The penalty will be 10% on the difference which exceeds 30% of the ITP
• Penalty for late payment of 6 Bi-monthly installment

  1. An instalment payment should be made within 30 days from due date as stated in the notice

  2. Late payment on any instalment would attract an automatic penalty of 10% of the instalment amount
• Monthly Tax Deduction (MTD) System

  1. MTD is applicable to individuals with employment income

  2. The employer is responsible to deduct the tax payable from the monthly remuneration of the individual according to the MTD Schedule

  3. The amount of tax deduction will depend on: gross monthly salary, contribution to EPF/pension fund, marital status, number of children and wife's / wives' working status

  4. The employer has to remit the tax deducted from the employees' remuneration for a particular month not later than the 15th of the following month
• If the employer fails to carry out the MTD duty, the employer can be fined not less than RM200 and not more than RM20,000 or imprisonment for not more than six months or both
• Penalty on unpaid tax

  1. When notice of additional assessment is served on a taxpayer, taxpayer must pay the additional tax within 30 days upon receipt of the notice of additional assessment, notwithstanding that the taxpayer appeals against the assessment

  2. When tax remains unpaid or a part remains unpaid within the stipulated 30 days of the date of notice of assessment, 10% penalty will be added to the tax payable
• Tax recovery methods


  • Recovery from husband and wife
  • Recovery from a person leaving Malaysia
  • Refusal of Customs clearance
  • Recovery by suit
• Offences and penalties


  • Failure to furnish return for one YA or Failure to give notice of chargeability
  • Failure to furnish a return for 2 YAs or more than 2 YAs
  • Incorrect return
  • Willful evasion
  • Assist in or advise on understatement of tax
  • Leaving Malaysia without payment of tax
  • Obstruction of officers in the course of duties
  • Breach of confidence by classified person
  • Offences by officials
  • Unauthorised collection of tax or penalties
  • Failure to keep records and give receipts
  • Failure to comply with a notice
  • Failure to comply with an order made
  • Failure to give notice by employer
  • Failure to comply with a direction to deduct tax from emoluments and pensions
  • Contravention of the duty imposed
  • Failure to comply with a direction given on retention of money concerning departing or terminating employees
  • Failure to provide correct particulars as required by the DG
  • Failure to furnish an estimate of company's tax (self assessment)
  • Failure to notify IRB on change of accounting period within 30 days
  • Failure to comply with monthly tax deduction scheme
  • Base erosion and profit shifting (BEPS)
• The Wealth of Nations was written in 1776
• In classical economic theory, the word 'rational' means that economic agents are able to consider the outcome of their choices and recognise the net benefits of each one. Rational agents will select the choice which presents the highest benefits
• It is a flawed assumption as people usually don't act rationally
• If a firm increases advertising


  Their demand curve shifts right