A. Introduction
1. Relevant Legislations (Revenue Law)
a) Income Tax Act 1967; and
b) Public Rulings issued by Inland Revenue Board (“IRB”) from time to time.
2. Self Assessment for Companies
a) Prior year 2001 – Official assessment system
Year 2001 onwards – Self assessment system (“SAS”)
b) Burden of computing the taxpayer’s liability shifted from IRB to the taxpayers
c) Form CP204 – estimate tax payable for a year of assessment and to be submitted to IRB within 30 days before the beginning of the new financial year of the Companies
d) Tax Audits by the auditor from IRB
- Via Street survey - to educate the public
- Purpose:
i) To make sure submission of income tax returns
ii) Payment of income tax
B. Judicial Attitudes Towards Tax Avoidance
1. Duty of the directors and those in charge of the affairs of corporations e.g. management of the Company to minimize tax by legitimate means. (as per the English case of Inland Revenue Commissioners v. Burmah Oil Co Ltd [1982] Simon's Tax Commissions 30)
2. Engaging the services of professional tax consultants.
3. Nothing wrong at all for a company to organize their affairs in a way as to minimize tax (as per the Malaysian Federal Court case of DGIR v. Rakyat Berjaya Sdn Bhd [1984] 1 MLJ 248)
C. Judicial Attitudes Towards Tax Evasion
1. It’s an offence under S. 114 Income Tax Act 1967 (please refer to the print-out)
2. Principles applicable by the Malaysia court to decide whether a tax scheme is illegal:-
2.1 If it is a sham or involves an artificial transaction designed to evade tax;
2.2 Sham / Artificial transaction – defined as something not natural / in the course of trade it is “not motivated by economic considerations (as per the Malaysian Federal Court case of CIT v. AB Estates Ltd [1967] 1 MLJ 89);
2.3 Understatement or omission or misstatement of facts – devise in the negative sense.
2.4 The taxpayer is not entitled to place himself outside the taxing statute by a devise.
C. Difference between Tax Avoidance/Mitigation v. Tax Evasion
Tax Avoidance / Mitigation =Legal Tax scheme/planning under the Malaysian revenue law
Take advantage of tax relief
1. Relevant Legislations (Revenue Law)
a) Income Tax Act 1967; and
b) Public Rulings issued by Inland Revenue Board (“IRB”) from time to time.
2. Self Assessment for Companies
a) Prior year 2001 – Official assessment system
Year 2001 onwards – Self assessment system (“SAS”)
b) Burden of computing the taxpayer’s liability shifted from IRB to the taxpayers
c) Form CP204 – estimate tax payable for a year of assessment and to be submitted to IRB within 30 days before the beginning of the new financial year of the Companies
d) Tax Audits by the auditor from IRB
- Via Street survey - to educate the public
- Purpose:
i) To make sure submission of income tax returns
ii) Payment of income tax
B. Judicial Attitudes Towards Tax Avoidance
1. Duty of the directors and those in charge of the affairs of corporations e.g. management of the Company to minimize tax by legitimate means. (as per the English case of Inland Revenue Commissioners v. Burmah Oil Co Ltd [1982] Simon's Tax Commissions 30)
2. Engaging the services of professional tax consultants.
3. Nothing wrong at all for a company to organize their affairs in a way as to minimize tax (as per the Malaysian Federal Court case of DGIR v. Rakyat Berjaya Sdn Bhd [1984] 1 MLJ 248)
C. Judicial Attitudes Towards Tax Evasion
1. It’s an offence under S. 114 Income Tax Act 1967 (please refer to the print-out)
2. Principles applicable by the Malaysia court to decide whether a tax scheme is illegal:-
2.1 If it is a sham or involves an artificial transaction designed to evade tax;
2.2 Sham / Artificial transaction – defined as something not natural / in the course of trade it is “not motivated by economic considerations (as per the Malaysian Federal Court case of CIT v. AB Estates Ltd [1967] 1 MLJ 89);
2.3 Understatement or omission or misstatement of facts – devise in the negative sense.
2.4 The taxpayer is not entitled to place himself outside the taxing statute by a devise.
C. Difference between Tax Avoidance/Mitigation v. Tax Evasion
Tax Avoidance / Mitigation =Legal Tax scheme/planning under the Malaysian revenue law
Take advantage of tax relief
Tax Evasion= Illegal tax scheme
Devise a scheme to exclude the taxpayers outside the taxing statute
Speaker: Soh Ghee Kian
Devise a scheme to exclude the taxpayers outside the taxing statute
Speaker: Soh Ghee Kian
For further and better particulars of the issue, kindly contact the moderator of the blog to get in touch with the Speaker.
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