Tax System In Malaysia

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Taxation is one of the important element that give most to country’s income. Tax collected by Inland Revenue Board of Malaysia (IRBM) will help Malaysian government for future development. It becomes tools to boost the Malaysian economic development (Junainah, Raman Noordin, Abdul Wahid Mohd Kassim, 2013). There are two categories of tax which are direct and indirect tax. Direct tax is refer to a tax paid by an individual or organization directly to a government, such as income tax, and real property tax. The direct tax will be under responsibility of IRBM. While indirect tax is a tax, such as a sales tax or value added tax that levied on good or services and not on individuals and is normally paid by the consumers in the form of higher prices.…show more content…
It has been officially announced on 22nd November 1998 by the Malaysian Government (Noor Sharoja Sapie, 2013). Previously, under Official Assessment system, the tax authority, Inland Revenue Board of Malaysia (IRBM) will send the tax return forms to the tax payers and the tax payers will declare all the necessary particular of their income and expenses to IRBM. While under Self-Assessment System, the taxpayers have to compute their taxable income and tax liability by themselves. The IRBM will accept all the information declared by the tax payer without checked the tax return forms as they only rely on tax payer’s honesty during their completion of the tax…show more content…
It begins with corporate taxpayers in the year of assessment 2001 and followed by businesses, partnership and cooperative in 2003 while for the individual tax payers, the Self-Assessment was introduced in 2004 (Noor Sharoja Sapie, Jeyapalan Kasipillai, 2013). Self-Assessment has been introduced due to unsatisfactory level of tax compliance of earlier assessment system, official assessment system (OAS). As such, Self-Assessment System expected to improve taxpayer compliance rate and help revenue collection for country. However, to make the Self-Assessment System successful, it requires voluntary compliance from the tax payers by understand the tax system and to possess adequate tax knowledge as to know their compliance obligation. Therefore the taxpayers have to understand the tax system and its procedures in order to fulfill their statutory

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