This document discusses factors that contribute to tax evasion and the differences between tax evasion and avoidance. It identifies high tax burdens, low incomes, weak government systems like corruption, and underground markets as factors that increase tax evasion. Tax morale and loopholes in tax deductions can also enable evasion. Tax avoidance uses legal methods to reduce taxes, while evasion intentionally violates tax laws. Penalties for evasion include fines, imprisonment, and additional taxes owed depending on the specific offense of incorrect returns, willful evasion, or understatement of taxes. Case studies are also referenced to illustrate how these laws have been applied.

1. TAXATION-2
OsamahAbdulfattah / SUKD-1503611

2. Contents…
■ Introduction
■ Factors Give Rise toTax Evasion
■ Differents between tax evasion v tax avoidance
■ Penalties and Offences

3. Factors Give Rise toTax Evasion
■ Tax burden
The relationship between tax evasion and the tax burden is that high tax burden
will lead to high tax evasion among the people.
1- High tax
2- Low income
3- Low benefit of paying tax
■ Weak system in the government
1- Corruption in the government
2- Implementing the penalty
3- Underground market

4. The Factors Give RiseToTax Evasion
■ Tax morale
1- First, justice of tax system, taxpayers may think of themselves first, if they look at
injustice, or more precisely is, if they do not expect any profit for themselves, they are more
likely to participate in non-compliance Taxation and rationalization of this procedure as a
self-defense.
2- Second, the selfless approach, one can apparent
a selfless concern for the well-being of others,
in the general society.

5. The Factors Give RiseToTax Evasion
■ Tax Deductions offering loopholes toTax Evasion
ex. donations and religious bodies for investment

6. Tax evasion vTax avoidance
1- Tax avoidance is legal, it happens inside the legitimate setting of the tax
system of decrease the taxation rate that is people or firms exploit the tax
code and take advantage “loopholes”,
i.e. take part in activities that are legitimate
2- Tax evasion is purposeful illegal
Conduct or activities including an
immediate violation of tax law to sidestep
paying the tax.

7. Cases OfTax Evasion
■ Lahad DatuTimber Sdn Bhd v DGIR
■ Yeoh Eng Holdings Sdn Bhd v Ketua Pengarah Hasil Dalam Negeri

8. Penalties and Offences
■ Incorrect Return
1- Section 113 (1)(2) of the IncomeTaxAct 1967 state that making any incorrect
return by deleting or minimizing any income of which he is needed by this act to make a
return in the best interests.
2- will be liable of 1,000 to 10,000 and 200% of tax undercharged if it come
under S 113 (1)(2).
3- As the case of KT Co v Ketue Pengarah HDN state that “the taxpayer is not
entitled to claim good faith as a defence under S113 (2). Good faith is a
defence for S 113 (1) but not provided for under S 113 (2)” (1991) MSTC 2594

9. Penalties and Offences
■ Wilful Evasion
1- Section 114 any deed or action intentionally done or performed with the
intention or purpose of escaping the tax.
2- will be guilty and fine around RM1,000 and RM 20,000 or imprisonment up to
3 years or it can be both; jointly with another penalty of up to 300% of the amount
that wasn’t charged it will be depending on the case.
3- In the case ofWw Brovom v Commissioners of Inland Revenue

10. Penalties and Offences
■ Understatement ofTax
1- Section 114 (1A) state that anyone who help in or give
advice with respect to the arrange of any return where
this return results in an understatement of the duty for
the tax of another person, he will be guilty of an offense
and shall on conviction to liable of the act.
2- taxpayer will fine between 2,000 to 20,000 or it can
take him to jail or it can be both

11. Thank you
for
your attention