Chapter 1

5,538 views
4,954 views

Published on

Published in: News & Politics
1 Comment
2 Likes
Statistics
Notes
No Downloads
Views
Total views
5,538
On SlideShare
0
From Embeds
0
Number of Embeds
82
Actions
Shares
0
Downloads
143
Comments
1
Likes
2
Embeds 0
No embeds

No notes for slide

Chapter 1

  1. 1. CHAPTER 1: INTRODUCTION TO MALAYSIAN TAXATION ATXB213 MALAYSIAN TAXATION I 1
  2. 2. LEARNING OBJECTIVE Explain the definition of taxation Understand history and background of taxation Sources of Malaysian Taxation Law Identify types of taxes Tax Avoidance and Tax Evasion ATXB213 MALAYSIAN TAXATION I 2
  3. 3. DEFINITION OF TAXATION  Oxford dictionary:  Contribution levied on persons, property, or business for the support of govt.  Law cases:  A compulsory exaction of money by a public authority for public purposes enforceable by law (Matthews v The Chicory Marketing Board, 1938).  Raising money for the purposes of govt by means of contributions from individual persons (R v Barger, 1908)  IRB Tax guide  Is an amount of money which is taken from your earnings to help towards some of the cost of services we received in this country ATXB213 MALAYSIAN TAXATION I 3
  4. 4. BACKGROUND OF TAXATION Income Tax Ordinance 1947 with effect from 1 January 1948 Replaced by Income Tax Act 1967 with effect from 1 January 1968 ATXB213 MALAYSIAN TAXATION I 4
  5. 5. SOURCES OF MALAYSIAN TAXATION LAW There are 3 sources of revenue law in the Malaysian context and they are: Statute law (referred to as the legislation Case Law (judge made laws) Practice of the Malaysian Inland Revenue Board (IRB) Implementation of Tax Laws: IRB is responsible for all policies relating to direct taxes and administer which are Income Tax, Petroleum Income Tax, Real Property Gains Tax and Stamp Duty. ATXB213 MALAYSIAN TAXATION I 5
  6. 6. CHARACTERISTICS OF TAXATION Compulsory payment Raised for government purposes The exactions do not constitute payment for services rendered The payments are not penalties The exactions are not arbitrary Enforced under any written law The exactions should not be incontestable No specific right is transferred ATXB213 MALAYSIAN TAXATION I 6
  7. 7. PURPOSE OF TAXATION  Revenue Ensuring stable growth in revenue to finance the annual budget  Growth Providing incentives within the tax system to promote growth, especially in the private sector ATXB213 MALAYSIAN TAXATION I 7
  8. 8. TYPES OF TAXES IN MALAYSIA  Direct taxes Paid directly by those on whom it is levied. Example of direct tax : Income Tax, RPGT, Stamp Duty and Petroleum Income Tax.  Indirect taxes Collected via third party. Example of indirect tax : Sales Tax, Service Tax and GST. ATXB213 MALAYSIAN TAXATION I 8
  9. 9. CHARACTERISTIC OF INCOME Regularity Income distinguished from saving Income must be received Customary receipts are income Illegality is of no relevance to assess ability Speculation is not income Reward for services Gift is not an income ATXB213 MALAYSIAN TAXATION I 9
  10. 10. CLASS OF INCOME Section 4 of ITA 1967 Sec 4(a): gain or profit from a business Sec 4(b): gain or profit from employment Sec 4(c): dividends, interest or discounts Sec 4(d): rents, royalties or premium Sec 4(e): Pension, annuities or other periodical payments Sec 4(f): gain or profits ATXB213 MALAYSIAN TAXATION I 10
  11. 11. CHARGEABLE INCOME Gross Income Adjusted Income Statutory Income Aggregate Income Total Income Chargeable Income • Sec 5 of ITA 1967 ATXB213 MALAYSIAN TAXATION I 11
  12. 12. TAX RATES Resident individual tax rates (pg 17-18) Tax Rebates (pg 19) ATXB213 MALAYSIAN TAXATION I 12
  13. 13. TAX AVOIDANCE AND TAX EVASION Tax avoidance are supported by commercial substance, motivated by commercial viability and most importantly are within the jurisdiction of the Act. Tax evasion on the other hand involves the employment of artificial or fictitious transactions such as inflating the expenses claimed, putting in phantom employees for salary deductions, under reporting cash sales with the sole intention to pay less tax. ATXB213 MALAYSIAN TAXATION I 13
  14. 14. THANK YOU Q&A ATXB213 MALAYSIAN TAXATION I 14

×