Introduction to
Malaysian Taxation
Ms. Noor Shazwani Binti
Baharum
Outlines:
• Definition of Malaysian Taxation
• The Objective of Taxation
• The Difference Sources of Revenue
Law
• Scope of Charge
• Direct Tax and Indirect Tax
• Year Assessment, Basis Year, Basis
Period, Financial Year, Accounting Year
Presentation title 2
What is taxation?
Presentation title 3
Taxation is a compulsory
payment charged by the
government to the taxable
person on the use of
income, and wealthy for the
common benefits.
a. Taxation as part of
government income.
The [Link] as a fund for
revitalizing economic growth.
Objectives c. Taxation as an instrument to
of distribute income from the
various level of individual for
Taxation? the benefit of the public.
5
There are three sources of revenue law in
Malaysia which are:
[Link] law (Orders and Regulations
prescribed by the Minister)
The [Link] law (judgement make in Malaysian
courts on tax matters)
Difference [Link] notes issued by the Inland
Revenue Board (IRB) and the Royal
Sources of Malaysian Customs.
Revenue (a) and (b) are regarded as a formal sources
of taxation law while item (c) is regarded as
an informal source of law.
Law
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Section 3 ITA 1967, stipulate that income shall
be charged for tax for each year of assessment
upon the income of any person accruing in or
SCOPE OF derived from Malaysia or received in Malaysia
from outside Malaysia.
CHARGE Effective 2004, a revised Para 28 (Sch 6, ITA
1967) stated the income of any person derived
UNDER from sources outside Malaysia and remitted
into Malaysia will be exempted.
SECTION 3, However, this exemption is not applicable for
Malaysian resident companies carrying on
business of banking, insurance, sea, or air
INCOME transport whose business income is charged to
tax on worldwide income.
TAX ACT
1967
7
DIRECT TAX &
INDIRECT TAX
Direct Tax
• A direct tax is paid by an individual or
organization to the entity that levied the
tax.
Indirect Tax
• Indirect tax is a tax that paid by
individual, or entity that levied upon goods
and services. The tax is payable through the
third party.
The differences between direct
tax & indirect tax
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THE CONCEPT OF YEAR ASSESSMENT,
BASIS YEAR, BASIS PERIOD,
FINANCIAL YEAR AND ACCOUNTING
YEAR.
Year Assessment
- Tax is assessed in respect of a year of assessment.
- Effective year assessment 2000, a year assessment and
year basis referred to a calender year.
Basis Year
- Basis year is referred to a calendar year.
- Example: Basis year 2021 is referred to period
from 1 January 2021 until 31 December 2021 (12
months).
Basis Period
- The basis year for a year of assessment shall
constitute the basis period for that year of
assessment.
- Therefore, a calendar year shall be the basis
period for a year of assessment.
Financial Year
- The financial year is a period in which any
financial statements of a company is made up,
whether
that period is a year or not.
- The financial year is referred to a company’s
accounting period, a range of time which profit
and loss account and balance sheet are makeup.
Accounting Period
- An accounting period is the time frame for which
a business prepares its financial statements and
reports its financial performance and position to
external stakeholders.
- The accounting period usually coincides with the
business's fiscal year.
What is Income Tax?
Presentation title 13
Who is Taxable?
Presentation title 15
a. Income tax shall be charged for each year of assessment upon
the income of any person accruing in or derived from Malaysia or
received in Malaysia from outside Malaysia.
b. An individual whose total taxable income EXCEEDS the threshold
value must register for an income tax file.
c. The scope of individual taxation depends on his residency status.
Resident individuals are taxed according to the tax rate and eligible
for tax reliefs in accordance with section 45A - section 49 of the ITA
1967. While non-resident individuals are taxed at a flat rate of 30%
and are not eligible to enjoy any reliefs.
d. Any source of income derived from outside Malaysia and received
in Malaysia is tax exempted.
How to file your Tax?
- Self Assessment System (SAS) is based
on the concept of Pay, Self Assess and
File
- Final Tax
Presentation title 17
a. Revenue is used by the government
to govern and manage Malaysia and
its development expenditure.
[Link] Government allocates and
spends tax collections for the
purpose of national security, physical
Why must development and infrastructure such
as roads, hospitals, schools as well
pay Tax? as economic and social development
such as health services, education
and welfare of the people.
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Return Forms can be
submitted by two (2)
methods:
[Link] to Tax Information
How to & Record Management
submit the Section, LHDNM.
ITRF? [Link] via MyTax system at
[Link]
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Tutorial
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Tutorial
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Thank you
Ms. Noor Shazwani Binti Baharum
noorshazwani@[Link]