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Are
you ready for the IRB officers visiting t
o your doorstep?
With the implementation of self assessment system for sole proprietors, individual, association and etc in the year 2004, we foresee increasing tax audits by the Inland Revenue Board (IRB) to ensure the tax return submitted by taxpayers are correct and prepared in accordance with the provision of law, guideline and ruling issued by the IRB.
Tax
audit
is the key enforcement tool which generally conducted in two ways namely desk audit and field audit.
Desk
Audit-This is a conventional way of tax audit which involves the review of document/information obtained through correspondences and interviews at the IRB’s offices.
Field
Audit-This has become the most common way of tax audit under self assessment system. Field audit entails a visit to the taxpayer’s premises for a detailed review of all relevant documents. The selection of taxpayers for a field audit is based on various criterias such as business performance, inconsistency of reporting income, spending habits, past compliance records, third party information and etc. Once the taxpayer is selected for field audit, the taxpayer is usually given 2-4 weeks notice to get the documents ready for audit. The notice may be extended through written request.
What
if you were not ready? The
penalty regimes awaiting you are as follow:-
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Penalties
for omission/non disclosure
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Voluntary
disclosure before selection for audit
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<
1 year :
15%
1-<3
years : 20%
5
years and above : 30%
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Voluntary
disclosure before audit commences
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35%
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Non-disclosure
(Discovery during audit)
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45%
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Repeated
offences
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45%
+ 10% for each repeated offence not exceeding 100%
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Penalty
for not providing reasonable facilities and assistance
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Fine
RM 1,000-RM 10,000 or
Imprisonment
<1 year or
Both
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Penalty
for failure to keep sufficient records
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Fine
RM 200 - RM 2,000 or
Imprisonment
< 6 months or
Both
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Having
aware of the risk, there is a need for taxpayers to take a proactive attitude
and approach in seeking ways to minimize tax risks.
If
you have any queries or even wondering whether you are ready for the tax audit,
please feel free to contact us. We shall be pleased to assist you in resolving
your queries.
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