CHAPTER 8

TAX ADMINISTRATIONS
Prepared by:
Pn Norul Akma Mansor
UITM Tapah
INTRODUCTION
 Tax administration encompasses:
i) the ascertainment of the tax liability
ii) the collection of tax
iii) the settlement of tax disputes
iv) the imposition of the penalties for violation of tax laws
 In Malaysia, the administrator that responsible and administer
the tax system is the Inland Revenue Board (IRB).
 Functions of the Board are:
 To act as an agent to the government and to provide services in
administering, assessing, collecting and enforcing payment of various
taxes.
 To advise the government on matters relating to taxation and to liaise with
the appropriate ministries and statutory bodies on such matter.
 To participate in or outside Malaysia in respect of matters relating to
taxation.
 To perform such other functions as are conferred on the Board by any other
written law.
RETURNS
 The self assessment system (SAS) has been
implemented w.e.f 2004 for tax payer other
than companies such as sole proprietors,
clubs, associations and Hindu joint families.
 Under this system, the taxpayer other than
companies are required to file in their return
not later than 30th April each of the
following year.
 For the sole proprietorship, Hindu joint
families who are carrying on business will be
extended to 30th June each following year.
TYPES OF RETURNS AND
SUBMISSION
Particulars Forms Date of Submission

Resident individuals without business income BE 30th April

Resident individuals with business income B 30th June

Companies C&R 7th month after the closing

accounting year end
Co-operative society CI 7th month after the closing
accounting year end
Partnership P 30th June

Unit trust, clubs, society, T 7th month after the closing

accounting year end
Association – with business 30th June
- without business 30th April
Non resident individuals with business income M 30th June

Non resident individuals without business M 30th April

income
Employers E 31st Mac
RESPONSIBILITIES
 Individuals taxpayers (section 77)
 furnish tax return within stipulated time
 declare all income correctly
 keep supporting documents such as receipts
within 7 years
 if the taxpayer has just arrived to Malaysia,
inform IRB within 2 months after arrival
regarding the chargeability of income
 if the taxpayer has moved or transferred to a
new place, inform IRB regarding the change of
new address within 3 months after the change
RESPONSIBILITIES (CONT)
 Business owner (section 82)
 maintain proper records (e.g. cashbooks,
ledgers, journals )and issue receipts
 all of these records must be kept in proper
places where easy references can carried out if
necessary
 records business transaction within 60 days from
date of transactions
 report business income correctly
RESPONSIBILITIES (CONT)
 Employer (section 83)
 file Form E/employer’s return consist of a list of employees
names, address and full amount of gross pay
 file Form EA consist of the details of remuneration paid to
each individual employee including the amount of contribution
to EPF and amount of tax deducted
 inform IRB regarding new employees, their addresses and date
of employment not later than 1 month from date of
commencement by using Form CP22
 inform IRB not later than 1 month before the cessation date of
employee by using Form CP22A
 in the case of employee leaving Malaysia, employer must
inform IRB within 1 month before the employee’s expected
date of departure by using Form CP21
 collect the scheduler tax deduction and pay to IRB within 10
days after every calendar month
TYPES OF ASSESSMENT
 Original assessment
 Reduced assessment
 Advance assessment
 Protective assessment
 Composite assessment
 Increased assessment
 Additional assessment
 ORIGINAL ASSESSMENT
 The assessment made in accordance to the
particulars provided by taxpayer or agent.
 DG can exercise his discretion in the following
circumstance:
 Taxpayer fails to submit any returns. However, the
taxpayer still be liable to a penalty for non-submission
of returns
 DG refuse to accept the returns submit by taxpayer
 REDUCED ASSESSMENT
 issued when there is an appeal made by the taxpayer
against an original or additional assessment which
resulting in a reduction of the original or additional
assessment
 ADVANCE ASSESSMENT
Issued for the following situation :
 when a person is about to leave Malaysia
 when taxpayer ceases to carry on business
 when a person ceases to possess a source of income
 PROTECTIVE ASSESSMENT
 Issued by the IRB to avoid assessment being time
barred especially when involved element of
negligence, fraud or wilful default.
 Based on the Income Tax Act 1967, issuance of
original and additional assessment subject to a 5
years time limit.
 COMPOSITE ASSESSMENT
 Composite assessment is normally issued to a tax
payer after tax investigations or field audits
 Issued to the tax payers when the tax payer :

 Fails to furnish a return to the IRB

 Fails to provide a ‘notice of chargeability’ to the IRB
 Fails to give make a correct return through omission
or understatement of income
 INCREASED ASSESSMENT
 The taxpayer reach an agreement with the DG during
the review of assessment
 The court had decided the issue in dispute and
resulted in an increased in the tax payable
 ADDITIONAL ASSESSMENT
 Issued for the following situation:
 When tax had been refunded to the taxpayer by
an error of fact or law
 The taxpayer had omitted certain income while
making the return and it is discovered by the DG
after making the original assessment
 When there is additional income which has not
been taken into account when making the return
INCREASED VS ADDITIONAL
ASSESSMENT
Increased Assessment
Issued under Section 96
Assessment served when the tax
charged is increased after and
appeal to the Special
Commissioner
Taxpayer cannot appeal as the
assessment is final
Additional Assessment
Issued under Section 91
Assessment made in addition to
the annual assessment due to:
•taxpayer had omitted certain
income
•tax had been refunded to the
taxpayer by an error
•there is additional income which
has not been taken into account
before
Taxpayer can appeal against the
assessment
PENALTIES FOR LATE PAYMENT
 When a notice of assessment is received, the
taxpayer must make the payment within 30
days from the date of the service notice.
 Failure to pay within stipulated time will
subject to a fine of 10% (after 30 days) and
a further 5% within 60 days after the
imposition of the 10% penalty.
APPEALS
 A person aggrieved by an assessment or deemed
assessment made in respect of him may appeal to
the Special Commissioner against the assessment.
 This can be done by giving a written notice of
appeal in a form letter or in the prescribed form,
stating the grounds of appeal and other particulars.
 The time specified in the notice of appeal is
normally within 30 days after the service of notice
of assessment.
 In the case of an advance assessment, the time
limit for a valid appeal is within the first 3 months
following the YA for which the assessment was
made.
OFFENCES AND PENALTIES
 Failure to submit a tax return form
 A taxpayer who without reasonable excuse, is guilty of
an offence and on conviction is liable to a fine from
RM200 to RM2,000 or imprisonment for a term of not
exceeding 6 months or both.

 Incorrect returns (section 113)

 A taxpayer who makes an incorrect return by omitting or
understating any income shall be liable to a penalty
from RM1,000 to RM10,000. In addition, a penalty of
double the amount of tax undercharged may be imposed
too.
OFFENCES AND PENALTIES
(CONT)
 Willful evasion (section 114)
 Anyone who willfully omits from a return, or making false
statement or entries in returns, or give false answers to a
question asked, or prepares and maintain false books of
accounts or make use of any fraud may be liable to fine
from RM1,000 to RM20,000 or imprisonment of not
exceeding 3 years or both. A special penalty of triple
amount of tax undercharged may be imposed too.

 Leaving Malaysia without paying tax (section 115)

 Any person who is leaving or attempts to leave Malaysia
without paying the tax shall be liable to a fine from
RM200 to RM2,000 or imprisonment not exceeding of 6
months or both.
OFFENCES AND PENALTIES
(CONT)
 Obstruction of IRB officers (section 116)
 Anyone who obstructs or refuse the IRB officers from the
entry into any land or building, or obstruct any
authorized officers in exercising their duties or fails to
give any reasonable assistance to the IRB, shall be liable
to a fine not more than RM4,000 or imprisonment not
exceeding 1 year or both.

 Offences by officials (section 118)

 Any person who exercising any official duty, demands
from any person an amount in excess of tax or penalties,
or uses his position to deal wrongfully with the IRB or
any other person shall be liable to a fine of not more
than RM20,000 or imprisonment not exceeding 3 years or
both.
OFFENCES AND PENALTIES
(CONT)
 Unauthorized collection (section 119)
 Any person who was not authorized but collects or
attempts to collect tax or penalty shall be liable to a
fine of not more than RM4,000 or imprisonment not
exceeding 1 year or both.

 Other offences (section 120)

 Any person who fails to fulfill the DG’s requests, or fails
to keep proper records or fails to submit information
regarding their employees shall be liable to a fine from
RM200 to RM2,000 or imprisonment not exceeding 6
months or both.