Self Assessment Tax System
PRESENTATION OUTLINE
Introduction Objective Tax compliance Compliance issues Challenges Conclusion
INTRODUCTION
On 2004, the Inland Revenue Board Malaysia (the
IRBM) has implemented the self-assessment tax system (the SAS) on individual taxpayers in order to promote voluntary tax compliance. Under the SAS, individual who has income accruing in or derived from Malaysia are required to disclose taxable income honestly, compute tax payable correctly, file tax return form and pay tax on a timely manner.
OBJECTIVE
To encourage voluntary compliance and efficient tax
administration and to make the tax system simpler and fairer. To assess and collect the correct amount of revenue as provided under the law in the most effective manner and at a minimum cost To instil public confidence in the fairness and integrity of the tax system
TAX COMPLIANCE
Defined as taxpayers’ ability and willingness to comply
with tax laws which are determined by ethics, legal environment and other situational factors at a particular time and place. In SAS, taxpayers are responsible to compute their tax liability and submit their tax returns according to the governing tax law and policy statements issued by the tax authorities.
COMPLIANCE ISSUES
Impact of the introduction of SA on compliance behavior of individual taxpayers
evasion behavior increase in tax rates tax audits as an enforcement strategy threat of penalties understanding and acceptance of tax law level of education
Source: EC Loo, M McKerchar and A Hansford, 2010. “Findings on The Impact of Self-Assessment on The Compliance Behaviour of Individual Taxpayers in Malaysia: A Case Study Approach”, Journal of Australian Taxation.
Cont..
Problem faced by Malaysian petty traders in tax compliance & tax audit in the era of SAS
petty traders must comprehend the new systems and to comply with tax administration. e.g. computations, payment
Introduction Objective Tax compliance Compliance issues Challenges Conclusion
INTRODUCTION
On 2004, the Inland Revenue Board Malaysia (the
IRBM) has implemented the self-assessment tax system (the SAS) on individual taxpayers in order to promote voluntary tax compliance. Under the SAS, individual who has income accruing in or derived from Malaysia are required to disclose taxable income honestly, compute tax payable correctly, file tax return form and pay tax on a timely manner.
OBJECTIVE
To encourage voluntary compliance and efficient tax
administration and to make the tax system simpler and fairer. To assess and collect the correct amount of revenue as provided under the law in the most effective manner and at a minimum cost To instil public confidence in the fairness and integrity of the tax system
TAX COMPLIANCE
Defined as taxpayers’ ability and willingness to comply
with tax laws which are determined by ethics, legal environment and other situational factors at a particular time and place. In SAS, taxpayers are responsible to compute their tax liability and submit their tax returns according to the governing tax law and policy statements issued by the tax authorities.
COMPLIANCE ISSUES
Impact of the introduction of SA on compliance behavior of individual taxpayers
evasion behavior increase in tax rates tax audits as an enforcement strategy threat of penalties understanding and acceptance of tax law level of education
Source: EC Loo, M McKerchar and A Hansford, 2010. “Findings on The Impact of Self-Assessment on The Compliance Behaviour of Individual Taxpayers in Malaysia: A Case Study Approach”, Journal of Australian Taxation.
Cont..
Problem faced by Malaysian petty traders in tax compliance & tax audit in the era of SAS
petty traders must comprehend the new systems and to comply with tax administration. e.g. computations, payment
References: Ern Chen Loo, J. K. H. (2005). Competency of Malaysian Salaried Individuals. eJournal of Tax Research, 3(1), 45-62 Ern Chen Loo, M. M., Ann Hansford. (2010). Finding on the impact of self-assessment on the compliance behaviour of indivodual taxpayers in Malaysia: A case study approach. Journal of Australian Taxation, 13(2), 1-23 CK Fatt and EWS Khin, 2011. “ A Study on Self-Assessment Tax System Awareness in Malaysia”, Australia Journal of Basic and Applied Sciences, 5(7): 881-888 Daniel Ho, Brossa Wong, (2008),"Issues on compliance and ethics in taxation: what do we know?", Journal of Financial Crime, Vol. 15 Iss: 4 pp. 369 – 382 Mohd Rizal Palil, (2010), “Tax knowledge and tax compliance determinants in selfassessment system in Malaysia”. Department of Accounting and Finance Birmingham Business School , The University of Birmingham Tapan K. Sarker (2003), “Improving Tax Compliance in Developing Countries via Self-Assessment Systems - What Could Bangladesh Learn from Japan?”Aisa-Pacific Tax Bulletin Vol. 9, No. 6 The Commonwealth Association of Tax Administrators, 24th Annual Tachnical Conference, Kuala Lumpur, Malaysia, 2003