Taxation Service

Corporate Tax Agent

Upon company incorporation, it is advisable to fix your financial year end and to appoint a tax agent so that he or she can monitor your tax compliance deadlines.

It is not advisable for business owners to file their own company taxes as they are complex and may miss opportunities where they can be optimized. Business owners are best to focus at running their business and let tax agents perform the tax computation and filing with the Inland Revenue Board of Malaysia (IRB).

Our commitment to ensure customer’s data integrity and confidentiality. Timely status report as well as provide cost effective and accurate deliverables. 
Type of tax filing are as follows:

  • Limited Company (i.e. Sdn Bhd)
  • Sole Proprietor
  • Partnership
  • Individual

Corporate Tax Compliance Services

  • Prepare and file at the Inland Revenue Board (IRB), the Company’s annual tax return (Form C) and, in that connection, prepare the income tax computation.
  • Advise the payment of the balance of tax (if any) based on the Company’s annual tax return
  • Advise the due date for submission of the return of original estimated tax payable (Form CP 204) and compliance requirements in relation to the amount of the estimated tax.
  • Complete and submit the Form CP 204 based on the amount of estimated tax payable furnished by the company.
  • Remind for the 6th and 9th month’s revision of estimates of tax payable.
  • Prepare and submit the revision of estimate of tax payable via Form CP204A, if any.
  • Remit monthly tax instalments payment at the IRB payment counter (excluding disbursement & logistical charges)
  • Send the tax instalment scheme or CP 204 to the company and to confirm receipt of the same.

 

Associations, Clubs, Management Corp.

  • Prepare and file at the Inland Revenue Board (IRB), the association’s annual tax return (Form TF) and, prepare the income tax computation.
  • Advise the payment of the balance of tax (if any) based on the association’s annual tax return.
  • Advise the due date for submission of the return of original estimated tax payable (Form CP 500) and compliance requirements in relation to the amount of the estimated tax.
  • Remind for the revision of estimates of tax payable.
  • Prepare and submit the revision of estimate of tax payable via Form CP502, if any.
  • Send the tax instalment scheme or CP 500 to the company and to confirm receipt of the same.

 

Tax Planning & Advisory Services

  • Company tax planning such as Re-structuring, Group relief, Group credit set-off.
  • Application of tax incentives such as Pioneer status, Investment tax allowance, Re-investment allowance.
  • Company allowance such as Industrial building allowance, Export allowance, Double tax deduction.
  • Pre-tax audit.
  • Real Property Gain Tax (RPGT).
  • Withholding tax planning & advisory.

 

Personal & Other Tax Services

  • Form B (Personal tax with business income)
  • Form BE (Personal tax with employment income)
  • Form P (Partnership)
  • Form M (Personal tax for non-resident)
  • Form EA
  • Form E
  • Tax Clearance
  • Tax Credit Refund
  • Tax Credit Set-off
  • Retirement scheme

 

Corporate Tax Compliance & Planning Services

Tax is one of the inevitable parts of a business. As such, the cost of improper or inadequate handling of tax issues could be devastating and might restrict the development of a company. Often, the corporation tax compliance involves a large amount of management time, effort, and costs.

 

Under the self-assessment system, the burden of computing the tax liability is shifted from the Malaysia Inland Revenue Board (IRB) to the taxpayer and, accordingly taxpayers are expected to compute their tax liability based the tax laws, guidelines and rulings issued by IRB. The Tax Returns submitted will no longer be subject to a detailed review by the IRB, but would be deemed as notices of assessment being served on the taxpayer.

 

In view of the above, tax compliance has never been so important Corporate Tax Compliance Obligations for the details. Failure in complying with the income tax requirements represents not only a financial risk i.e. financial penalties and possible increase in the tax charge but also a serious business risk, as it can damage the taxpayer’s reputations and brand name.

Introduction

Malaysia income tax laws and regulations impose many responsibilities on tax payers, there are also numerous reliefs and incentives available to reduce tax burden in Malaysia. As a tax payer and business owner, you often wish to maximize your business income, a proper income tax planning will help you in reducing your income tax payable.

 

Although the amount of tax savings may not be huge sometime, the long ­term savings would surely be worth the hassle. Tax payers should bear in mind that taxes payable can run into huge amounts, it can cost you even millions of ringgit sometimes. Balanced against that, the hassle of spending some time and a comparatively small amount of cash to engage a good tax expert does not seem a tough decision to make.

 

TIPS FOR INCOME TAX SAVING

  1. Claim all possible tax deduction

Tax deductions reduce your taxable income. Your total deductions are subtracted from your taxable income in order to determine your total taxable income for the year. Make full use of the available tax reliefs will save you more taxes.


Please be reminded to keep good tax records for future tax audit conducted by Inland Revenue Board Malaysia (IRBM).

 

  1. Submit and pay income tax on time

Failure to submit or pay income tax on time may results in heavy tax penalty. Always submit and pay income tax on time and keep relevant records is responsibility of a good tax payer.

 

  1. Follow Income Tax Act

Inland Revenue Board Malaysia (IRBM) is responsible for the collection and overall administration of direct taxes under the following Acts:

 

  • Income Tax Act 1967
  • Petroleum (Income Tax) Act 1967
  • Real Property Gains Tax Act 1976
  • Promotion of Investments Act 1986
  • Stamp Act 1949
  • Labuan Business Activity Tax Act 1990

Thus, it is undoubtedly that you will face lesser troubles if you submit your income tax by following the above Acts. IRBM is also issuing public ruling to provide relevant guidance for the public.

 

  1. Apply for tax incentive

There are various tax incentives offered by the government which could further reduce a company’s tax liability. The Income Tax Act 1967 provides incentives in categories such as reinvestment allowance, approved service projects, international procurement centres, regional distribution centers, biotechnology and approved businesses. Further, there are also various tax incentives provided under the Promotion of Investment Act 1986, such as investment tax allowance, infrastructure allowance and pioneer status companies.

 

  1. Seek the advice of tax consultant

In most cases, using a tax agent or accountant won’t just save you a lot of time, it will also improve your tax refund or net payable. We are experts in tax and constantly stay up-to-date with changes in tax legislation. We may find you are entitled to deductions you are unaware of or even an offset you didn’t know existed. The best part is our tax fee is reasonable and is claimable as a deduction on next year’s tax return.

 

  1. Be charitable

Donating to charity is always a good thing but what makes it even better is that the amount you donate is deductible on your tax return. After you make a donation, please ask for an official receipt and keep it properly. At tax time, enter the total amount into the charity donations section of your tax return.One thing about donations we should clear up: Your donations do not come straight back on to your tax refund. The amount is subtracted from your taxable income, which means you will get a percentage back.

 

  1. Earn Tax-free income

Some income is not subject to income tax. By earning more tax-free/net-tax income, a taxpayer can lower their tax liability. You could do this by depositing money with licensed bank, investing in bonds, investing in share market, and taking advantage of certain employees’ benefits such as childcare allowance.

 

  1. Reduce Your Tax Rate

The highest tax rate of a company or limited liability partnership (LLP) is 24%, if your individual income tax rate is higher than 24%, it will be more tax efficient to tax the business income under Company/LLP.On the other hand, if your individual tax rate is lower than 24%, you may want to swift the business income to be taxed under individual through payment of directors’ fees, remuneration and etc.

TAX EVASION

Although tax avoidance planning is legal, tax evasion — the reduction of tax through deceit, subterfuge, or concealment — is not. Frequently, what sets tax evasion apart from tax avoidance is the IRBM’s finding that there was some fraudulent intent on the part of the taxpayer.

The following are four of the areas most commonly focused on by the IRBM as pointing to possible fraud

  • A failure to report substantial amounts of income;
  • A claim for fictitious or improper deductions on a return, when no verification exists; and
  • Accounting irregularities, such as a failure to keep adequate records, or a discrepancy

 

between amounts reported on a corporation’s return and amounts reported on its financial statements.

We would like to emphasis that Tax Evasion is prohibited in Malaysia. IRBM will imposed heavy penalties (or imprisonment or both) to tax payer if they found out there is any tax evasion activities.

Thus, we will not help our client in tax evasion. We believe that as a good citizen, every tax payer shall pay their income tax based on their chargeable income as indicated by Income Tax Act 1967.

 

WHAT WE CAN HELP YOU?

We are licensed Tax Agent registered with Inland Revenue Board (IRB) under Section 153(3) of Income Tax Act 1967. As a professional tax consultant, we can advise and assist you in your company or individual income tax compliance and submission according to Income Tax Act 1967, IRB’s public ruling, Tax audit & investigation frameworks, Tax technical guideline and etc. We can also advice you on income tax incentives which are available and best suited for you.

Our professional staff will assist our clients with:

  • the preparation and submission of all forms and returns on a timely basis;
  • the computations of tax payable whilst ensuring all possible deductions have been utilized;
  • correspondence with IRB in the event of tax appeals, disputes and reassessments;
  • advise on the best and latest possible incentive/tax deduction available for the tax payer.

 

Self Assessment For Companies & Tax Audits in Malaysia

Under the Self Assessment System, the burden of computing the taxpayer’s liability is shifted from the Inland Revenue Board (IRB) to the taxpayer and accordingly, taxpayers are expected to compute their tax liability based on the tax laws, guidelines and rulings issued by the IRB.

The Income Tax Returns (Form C) submitted by the companies will no longer be subject to a detailed review by the IRB.

The main objective of the Self Assessment System is to inculcate a practice of voluntary compliance by the taxpayers and at the same time reduce the workload of the IRB to enable them to concentrate on areas which have a high tax risk and a potentially significant loss in revenue.

The implementation of the self assessment system has also resulted in changes to the tax compliance cycle and the penalty provisions.

 

WHAT IS TAX INVESTIGATION?

Tax investigation is conducted by surprise should there be a suspicion based on precise and definite evidence that a taxpayer is deliberately trying to avoid paying tax or has committed an act of willful evasion under the tax laws. The purpose of tax investigation varies from business to business. The tax authority’s personnel will visit to the taxpayer’s business premises, personal residences, agent or representatives premises to take possession of the required documents and books of accounts for investigation purposes. Besides that, notices may be served on taxpayers, creditors and bankers of the taxpayer to collect additional information to come up with the best judgment of the tax affairs of the taxpayer.

 

WHAT IF TAXPAYERS UNDERSTATED OR OMITTED THEIR COMPANY’S INCOME AND IRB FINDS OUT?

What IRB does is to ensure the taxes reported and paid by taxpayers are correctly prepared by way of conducting tax audits. IRB’s selection process for tax audits is by way of reviewing assessment submissions for irregularities in financial ratios and among others, information provided by third party.

In cases where fraud, willful defraud or negligence is detected, IRB is empowered to revise the tax computations, taking into account tax lost beyond the 6 years of investigation even though the taxpayer may not have records for those periods. If this happens, additional assessment will be issued to recover the tax lost, coupled with penalties, which can be up to 300%. In serious cases, or for repeated offenders, the taxpayer may be prosecuted and if he is found guilty, imprisonment of up to 3 years can be imposed.

To avoid penalty, it is recommended to keep a full set of records and accounts to avoid any misunderstanding in the tax audit process.

 

HOW DOES THE IRB CONDUCT AN AUDIT?

Once a taxpayer is selected for an audit, the IRB will inform the taxpayer via a telephone call followed by an official notification letter sent via mail or fax.

The period between the date of notification and the audit visit is 14 days. A shorter period of notification may be fixed by IRB with the consent of the taxpayer.

The scope of a tax audit under the self assessment system normally covers a period of 1 to 3 years, unless there are valid reasons to go beyond that period. The time frame for the conclusion of a tax audit is normally within 3 months.

Upon the completion of an audit, the IRB will issue a tax computation summarising the tax adjustments based on their findings and subsequently an additional assessment to collect the additional taxes from the taxpayer.

The taxpayer may still appeal against this assessment by submitting the appeal, through the prescribed Form Q to the Special Commisioners of Income Tax within 30 days from when the assessment is raised.

With effect from 1 Jan 2014, the time-bar for tax audits is reduced from 6 years to 5 years.

Penalty Provisions under Tax Audit System

(a) Penalties for omission/non-disclosure

Under the tax audit system, the IRB has also introduced a new penalty regime for non-disclosure and omission of information that affects a taxpayer’s tax liability. The penalty regime is summarised as follows:

 

Voluntary disclosure before selection for audit

Within 60 days from the due date for furnishing the return form

10%

 

More than 60 days but less than 6 months form the due date for furnishing the return form

15.5%

 

6 months to 1 year

20%

 

1 year to 3 years

25%

 

3 years & above

30%

Voluntary disclosure after the case is selected for audit but before audit commences

 

35%

Non-disclosure (discovery during audit)

100% of tax undercharged (may consider for 45% for 1st offence)

 

Repeated offences

+10% for each repeated offence not exceeding 100%

 

 

(b) Penalty for not providing reasonable facilities and assistance

Based on Public Ruling 7/2000, failure by a taxpayer to provide reasonable facilities and assistance to the IRB when conducting an audit is an offence and upon conviction, the taxpayer may be liable to a fine of between RM1,000 to RM10,000 or face imprisonment for a term not exceeding 1 year or both.

 

(c) Failure to keep sufficient records

The company or persons responsible, upon conviction will be liable to a fine of between RM200 to RM2,000 or face imprisonment for a term not exceeding 6 months or both.

 

TAX AUDITS BY IRB

Under Self Assessment System, tax audits will be IRB’s key enforcement tools to ensure that the tax returns submitted are correct and have been prepared in accordance with the provisions of the laws, guidelines and rulings issued by IRB.

Essentially, an audit is an examination of a taxpayer’s records to ensure that the income and tax liability declared to the IRB in the Income Tax Return are true, correct and comply with the tax laws and rulings.

A tax audit is an examination of a taxpayer’s business records and financial affairs to ascertain that the correct amount of tax are reported and paid in accordance with the tax laws and regulations.

 

Desk Audit and Field Audit

IRB carries out 2 types of audits, namely Desk Audit and Field Audit.

A desk audit is done at the IRB’s office where IRB will send letters to selected taxpayers, requesting for documents to support the assessment submitted. This would normally involve checking all information on income and expenses as well as various types of claims made by a taxpayer in his income tax return. This usually concerns straightforward cases or tax adjustments which can be handled via correspondences or if necessary, an interview with the taxpayer at the IRB office.

Within 2 to 3 weeks after the audit, IRB will notify the taxpayer whether additional tax payments need to be made. If IRB’s review shows overpaid taxes, a refund will be made to the taxpayer.

A field audit is where IRB officers will audit the taxpayers’ records at their premises. It involves the examination of the taxpayer’s business records. For a sole-proprietor or partnership, it may also involve the examination of non-business records such as personal bank statements.

IRB will serve a 14 day notice to the taxpayers to prepare the necessary documents and records. There will be at least 2 officers to conduct each audit, and their names will be given in the notice.

Sometimes, IRB may conduct field audits on tax assessments up to 3 years back. Should there be discrepancy between the records and the assessment submitted, tax assessment will be amended accordingly and the taxpayer will be notified within 3 months after the audit.

The Desk Audit will involve the review of documents or information obtained by correspondence and interviews at the IRB’s offices whilst the Field Audit would entail a visit to the taxpayer’s premises for a detailed review of all revelant documents.

Cases for audit are selected through the computerised system based on risk analysis criteria and on various criteria such as business performance, financial ratios, type of industry, past compliance records, third party information, etc.

 

TAXPAYER RESPONSIBILITIES

Every taxpayer who is liable to tax is required to declare his income to Inland Revenue Board of Malaysia (IRBM). The taxpayer is responsible for:

  • Obtaining and forwarding Income Tax Return Form (ITRF). A company has to send or return the ITRF that has been duly filled, without attached documents, to Information Processing Department, IRBM within 7 months after the close of the accounting period. Supporting documents need not be enclosed, except that in repayment cases, dividend vouchers need to be enclosed with the ITRF.
  • Submitting tax estimation and paying instalment within the stipulated period
  • Computing the company income tax
  • Declaring income and expenses including deductions and rebates
  • Keeping records for audit purposes

 

TAX PAYMENT – INSTALMENT PAYMENT CP204

For existing companies, the estimated tax payable has to be paid in equal monthly instalments beginning from the second month of the basis period for a year of assessment.

For new companies, installment payments must commence in the 6th month of the basis period for the year of assessment i.e. payable in the 6th month after the company commences operations. A company is required to pay the installment of the estimated tax by the 10th day of each month.

 

APPLICATION TO PAY BALANCE OF TAX BY INSTALLMENTS

If the company has not fully paid the tax for that period, the company can apply to pay the balance of tax by installments. The company can request in writing to the Collection Unit before the last date of payment of the relevant year. However, please note that even if the request is accepted, late payment penalty will still be imposed.

 

PENALTY UNDER INSTALLMENT SCHEME

  • If a company fails to pay the monthly installment on the tax estimate by the stipulated date, a late payment penalty of 10% will be imposed on the balance of tax installment not paid for the month.
  • If the difference between the actual tax payable and the estimated tax payable (if the revised estimate is not furnished) is more than 30 % of the actual tax payable, a 10% increase in tax will be imposed on that difference.

 

The formula for calculating the amount of tax to be increased is as follows:
Amount of tax to be increased = {(AT-ET) – (30% x AT)} x 10% where:

AT: actual tax payable
ET: revised estimated tax payable or estimated tax payable (if no revised estimate is furnished)

 

PENALTY FOR LATE PAYMENT

If the balance of tax payable is not paid by the due date, a penalty of 10% will be imposed on the outstanding amount. If the tax payable and penalty is still outstanding within 60 days from the due date, an additional penalty of 5% will be imposed on the tax and penalty outstanding.

 

APPEAL ON PENALTY

If the balance of tax payable is not paid by the due date, a penalty of 10% will be imposed on the outstanding amount. If the tax payable and penalty is still ouAn appeal in writing within 30 days from the statement of account can be submitted to the relevant branch (Collections Unit), if the company does not agree with the late payment penalty imposed.

The company has to pay its tax liability first irrespective of any appeal.

 

 

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