FAQ

Malaysia Institute of Accountants (MIA) has set out the basis for establishing a reasonable level of remuneration, commensurate with the provision of professional assurance services of an acceptable and recognized standard.

With effect on 1 March 2010, MIA has issued the Recommended Practice Guide 7 (RPG 7) for charging professional audit and assurance services.

Why did the MIA issue this Practice Guide? Reasons are as follows:-

● Increased in compliance cost and time spent on each audit for ensuring continuous up-grading of skills and adherence to professional pronouncement due to higher auditing standards requirements.

● Increased in operating costs over the years

● Ensuring a reasonable level of remuneration will encourage the practitioners/auditors to maintain and upgrade the quality of service rendered.

● Ensuring practitioners/auditors’ have remained their professionalism and not affected by other competitors.

In order to uphold the spirit of the Competition Act (CA) 2010 and not breach any of its provisions, MIA has decided to withdraw the RPG 7 with effect from 1 June 2015. However this practice guideline will still become part of our auditors’ guidance in performance of and charging for their respective duties.

(i) Time-based billing

Time-based billing pre-supposes all information and knowledge is of equal value to all clients. It also discounted the value of research needed to satisfactorily discharge an assignment and the knowledge accumulated by the firm.

(ii) Value-based billing

Value-based billing takes cognizance of the knowledge and skills that a practitioner brought to bear on the assignment and the professional judgement that he was called upon to make. At the same time, the client who derived a certain value, be it functional value or emotional value, must be reflected by a fair and equitable fee payable.

1. Hire A Proficient, Knowledgeable Accounting Personnel/Accountant

It is important to highlight that an inefficient and poor accounting personnel will drive your audit fees much higher. For example, delay in responding to the audit queries or requests, improper way of recording the transactions. Thus, it is crucial for a company to have a qualified accounting personnel and extensive relevant experience.

2. Be Transparent And Active Communication With The Auditors

Be upfront and transparent with any issues you think the auditors should know about. Mutual respect for each other will go a long way in making sure your audit is efficient and effective. Timely communication at all levels ensures all parties are on the same page with respect to audit status, making the process as efficient as possible.

3. Be Organized And Preparations Throughout The Year

Be organized and prepare appropriate schedules of accounts, monthly reconciliations. Taking actions on auditors recommendations once they are known for improving your company internal controls, reduces your company’s auditing time spent and audit procedures due to strong internal control is in place. Consequently reducing your audit fees!

4. Ensure Your Provider Audits Top-Down

Auditors need to be able to see the big picture, and starting from trial balance or subsidiary level and working up will not allow them to do this, which can lead to over auditing, particularly in consolidated financial statements. Instead, ensure they are able to start at the top level consolidated numbers and can look down from there.

5. Complex And Unusual Transactions

To consult your auditors on those complex and unusual transactions are recommended. For example, transactions such as business acquisitions, discontinued operations, or others may be unusual and highly significant. Involving the auditors at the time of transaction will reduce time and year-end surprises.

6. Quick Response

Delay in responding to the auditors’ requests and queries will prolong the audit process and undoubtedly increase audit fees. Answering quickly and having documents readily available will promote an efficient cost effective audit.

7. Performing A Self-Audit

A Self-audit performed within the company before the auditors commence, will provide you an opportunity to correct some errors. Focusing on high risk areas, high value balances. This way, you are confident that the auditors will have the best “product” to work with, audit procedures will be reduced, and will lead to lower fees.

8. Prepare An Annual Summary

Presenting to your auditors an annual summary in a memo format of all the significant and new events occurred during the year, changes in personnel or corporate structure, variance analyses on revenues, expenses, assets and liabilities with explanations, will assist the auditor in effectively planning and executing the audit.

9. Treating Your Auditor As A Partner

Treating your auditor as a partner is a must. Take the opportunity to discuss with your auditors various issues or concerns other than the audit, such as tax compliance, business strategy, performance measurement, etc. An effective audit should conclude with an added value.

10. Think the long term

Frequent change in auditors would probably be the costliest business decision that will surely result in high audit fees. Investing the time to select an audit firm that “fits” with the company will not only help in reducing audit fees in the long term but can result in increased operating efficiency, improvement of the bottom line with the reduction of costs.

Yes, the Registrar (SSM/CCM) has implemented audit exemption under section 267(2) of the Companies Act 2016 for certain categories of private companies based on the qualifying criteria set out in Practice Directive No. 3 of 2017 issued on 4 August 2017.

Your company has to be one of the following categories of private companies qualify for audit exemption:

(a) Dormant companies
(b) Zero-Revenue Companies
(c) Threshold-Qualified Companies

A. Dormant companies
A dormant company is a private entity as defined by the Malaysian Accounting Standards Board (MASB) and the company is qualified for audit exemption if--

(a) it has been dormant from the time of its incorporation; or

(b) it is dormant throughout the current financial year and in the immediate preceding financial year.

● a company is dormant in a financial year if the company does not carry on business and there is no accounting transaction occurred;

● “Accounting transaction” means a transaction, accounting or other records of which is required to be kept under section 245(1) of the Companies Act 2016, excluding a transaction arising from any obligations that the company is required to abide by any laws to pay and its related costs to comply.

B. Zero-Revenue companies
A zero-revenue company is a private entity as defined by the Malaysian Accounting Standards Board (MASB) and the company is qualified for audit exemption if—

(a) it does not have any revenue during the current financial year;

(b) it does not have any revenue in the immediate past two financial years; and

(c) its total assets in the current Statement of Financial Position (FS) does not exceed RM300,000 as well as in the FS of the immediate past two financial years.

● “revenue” does not include credit entries for reversal of accounting entries arising from earlier entries, accounting entries related to taxation, reversal of provisions made earlier and gain on derecognition of property, plant, equipment and investment property in the Statement of Comprehensive Income;

● a company ceases to be inactive where there are revenue received or receivable; and

● any expenses incurred in maintaining the company is disregarded.

(C) Threshold-Qualified companies
A threshold-qualified company is a private entity as defined by the Malaysian Accounting Standards Board (MASB) and is qualified for an audit exemption if -

(a) it has revenue not exceeding RM100,000 during the current financial year and in the immediate past two (2) financial years;

(b) its total assets in the current Statement of Financial Position (FS) does not exceed RM300,000 and in the immediate past two (2) financial years; and

(c) it has, at the end of its current financial year and in each of its immediate past two (2) financial years end, not more than five (5) employees.

● revenue includes revenue receivable during the year.

Where a company which is exempt from audit requirements ceases to be so qualified, it shall thereupon cease to be so exempt but it shall remain so exempt in relation to accounts for the financial years in which it qualifies.

Notwithstanding anything the in Practice Directive No. 3 of 2017 issued by the Registrar , a company that is eligible for audit exemption shall be required to audit its accounts if it receives a notice in writing requiring the company to audit its accounts during a financial year but not later than one month before the end of that financial year from:–

(a) any member or members eligible to vote and holding in aggregate of not less than 5% of the total number of issued shares of the company or any class of those shares;

(b) not less than 5% of the total number of members eligible to vote in of the company; or

(c) the Registrar who directs the company to have its accounts audited.

Any company that elects to be exempted from audit must lodge its unaudited financial statements with the Registrar accompanied with the required documents in compliance with sections 258 and 259 of the Companies Act 2016.

The audit exemption will be applicable for a private company’s financial statements with annual periods commencing on or after the dates stated in the Practice Directive 3/2017 for the respective categories of companies.

There are three (3) categories of companies, namely dormant companies, zero revenue companies and threshold-qualified companies.

The annual periods’ commencement dates for these categories of companies are as follows–

(a) Dormant companies incorporated on or after 31 January 2017 – financial periods commencing 31 January 2017 where election not to audit its financial statements will be triggered for financial periods commencing on or after 31 January 2017.

(b) Dormant companies incorporated on or before 30 January 2017 – financial periods commencing 1 September 2017 where election not to audit its financial statements will be triggered for financial year ended 31 August 2018;

(c) Zero-revenue companies – financial periods commencing 1 January 2018 where election not to audit its financial statements will be triggered for the financial year ended 31 December 2018.

(d) Threshold-qualified companies – financial periods commencing 1 July 2018 where election not to audit its financial statements will be triggered for the financial year ended 30 June 2019.

a. A Detailed Overview

Have a complete picture of how your business is working and where your company is most stable after auditing your company financial statements. Reducing the time spent on those stable areas and focusing on the weaker part of your company. Consequently, improve the business performance as a whole.

b. Additional Perspective To Ensure Compliance With Laws And Regulations

Ensuring your financial statements have full compliance with laws and regulations. Your auditors will also offer helpful suggestions, if there are any serious flaws in your systems. Conducting the audit early on, it could mean the difference between your company flourishing and struggling in the near future.

c. Improve Your Credit Rating and Trustworthiness

Possibilities for getting approval of loans will be increased if bankers have definite proof you have the resources to repay the loan. As investors’ perspectives, increased confidence in your financial statements will ensure their continued support in your company.

d. More Reliable

Provide reliability in your financial statements and assurance that everything in your business is going as planned and assist the tax official to be able to rely on your audited financial statements to reach their conclusions about your company taxation or any other matters from their area of interest.

e. Be Certain Where Your Company Will Be In The Future

With more information about your company on areas that need improvement and be certain on the areas that are in a smooth business process. Demand a closer look that requires more control to be placed in the current control system with additional care before those seemingly minor mistakes hurt the company.

f. Promote Accountability And Improvement From The Bottomline

Promoting accountability for the managers and employees in your company. Thus, your employees will focus more on dependable accounting and management. They will be able to improve themselves by correcting any flaws in their own work, so they can make their work even more reliable in the future.

Section 248(1)(a) states that the directors shall prepare the audited financial statements within 18 months from the date of incorporation. Circulation of financial statements for Sdn Bhd under section 258(1)(a) is within six (6) months from the financial year end. The Act doesn’t state that the circulation of the first set of Financial Statements must be within 18 months from date of incorporation.

Yes, for the first set of Financial Statements for a private company, the preparation must be made within 18 months after its incorporation but may be circulated beyond the 18-month period (so long as the circulation is made within 6 months from the financial year end).

One of the benefits of hiring a tax consultant is a guidance on the scope of tax and the expenses that are available for tax deduction, specific deduction and double deduction, which are applicable to business owners who fill in Form B and Form P.

Furthermore, you should gain maximum benefit from tax allowances and incentives, save time by letting tax consultants manage tax-related matters under the self assessment regime like computing tax, keeping accounting records on business for seven years, as well as paying the installments on tax estimates to the IRB.

Secondly, you can avoid or minimize tax penalties arising out of non-compliance with the tax laws and can capitalize on tax planning to minimize your tax liability.

Thirdly and also the key consideration would be the tax savings and costs to hire a tax consultant.

Generally, the fees range from RM 350 to RM 1,500 (excluding the bookkeeping fees, out-of pocket expenses, GST/service tax, applicable to individuals who have business income and are required to file Form P & Form B). It is important to note that the fee of having a professional prepare a statutory income tax return would depend on the type of income tax return forms, such as whether one is under employment or is an individual businessman, and the complexity of each case.If your income is derived from an employment source, it is very straightforward that you just use your chargeable income to deduct your tax reliefs. You may risk not doing a 100% accurate job, but if your tax savings are just a few hundred ringgit, it is difficult to justify the consultant’s fees.

However, if you own numerous properties, receive rental income and own business, your case becomes complicated. It would make more sense for you to look into hiring a personal tax consultant.

Yes you need to register an Income Tax Number if you fulfill one of the following:-

● Single status individuals earning over RM34,001 per year (after EPF deduction)

● Married and unemployed individuals who earn more than RM46,001 per annum

● Individuals who do business (even if they are at a disadvantage)

● New Employees Withdrawal Monthly Tax Deduction (PCB)

● Individuals with taxable income

● Individuals who sell / buy property.

Registration of income tax numbers can be made by:

1. online ( online ) via e-list http://edaftar.hasil.gov.my ; or
2. manual at the nearest Inland Revenue Board of Malaysia (IRBM).

Application to register an income tax reference number can be made at the nearest
IRBM branch.

Documents Required For Registration
● A copy of the latest Salary Statement (EA/EC Form) or latest Salary Slip
● A copy of Identification card (IC) / police IC / army IC / international passport
● A copy of marriage certificate (if applicable)

You can also register an Income Tax reference number via e-Daftar, or you need any
assistance, please do not hesitate to contact us.

The required supporting documents are as follows:

Registration by e-Register:
● Passport for non-Malaysian citizens
● Business Registration Certificate (for individuals doing business)

Manually sign up:
● Form CP600
● Identity card (new identity card, military, police or passport)
● Business Registration Certificate (for individuals doing business)
● Income statement / salary slip

If you have more than one income tax file, you are advised to refer to the branch that operates your income tax file for the purpose of updating the status of the file.

An individual who is resident in Malaysia is taxable on all income accruing in or derived from Malaysia and on income received from outside Malaysia. The scope of taxation of an individual depends on his resident status. However, with effect from the year of assessment 2004, income received in Malaysia from outside Malaysia is exempted from tax. Hence, an individual, either or non-resident, is taxable only on income accruing in or derived from Malaysia.

The taxpayer is responsible for:

Submit an Income Tax Return Form (BNCP) either using a paper form or through an
e-Filing application;
● Report income and expenses, including deductions and rebates;
● Calculating income tax; and
● Keep records, documents and worksheets for seven (7) years for auditing
purposes.

Taxpayers do not have to submit BNCP records, documents and worksheets; but they must be kept for seven (7) years. The seven-year calculation begins from the end of the year in which the BNCP has been submitted.

● EA / EC form
● Dividend vouchers
● Insurance premium receipt
● Book purchase receipt
● Medical receipt
● Donation receipt
● Zakat payment receipt
● Birth certificate
● Marriage certificate
● Other supporting documents & Worksheet (if applicable)

If you do not keep your business records, under section 119A of the ITA 1967, you may be sued in court and if convicted, you could be fined not less than RM300 and not less than RM10,000 or be jailed for a year or two, both.

If you are:
Individuals not doing business , please complete:

● Form BE
➢ Employment Income and Other Income (Non-Business) for Individual Resident

● Form M
➢ Business Income, Employment and Other Income for Non-Resident Individuals

● BT Form
➢ Business Income, Employment and Other Income (Knowledgeable / Expert Employer) for Resident Individuals

● MT Form
➢ Business Income, Employment and Other Income (Knowledge Workers) for Non-Resident Individuals

Individuals doing business , please complete:

● Form B
➢ Business Income, Employment and Other Income for Resident Individual

● Form M
➢ Business Income, Employment and Other Income for Non-Resident Individuals

● BT Form
➢ Business Income, Employment and Other Income (Knowledgeable / Expert Employer) for Resident Individuals

● MT Form
➢ Business Income, Employment and Other Income (Knowledge Workers) for Non-Resident Individuals

BNCP delivery deadline is:

Individuals not doing business: before or on April 30
Individuals doing business: before or on June 30

Yes, failure to submit BNCP within the stipulated period is an offense and may be subject to penalty / tax increase under the Income Tax Act 1967.

If you are going to work overseas, the following actions need to be taken:

Employer:
Your employer is responsible for notifying IRBM within thirty (30) days prior to the date of termination. Employers will also need to complete the CP21 Form (Notice By Employer For Retired Employees) and submit it to the IRBM branch that handles your income tax file. The employer will have to withhold any payments due to you until the Tax Settlement Letter (SPC) is received.

Workers:
You will need to provide in writing (letter) together with relevant supporting documents to the IRBM branch which handles your income tax file in relation to your status of having no income in Malaysia due to / working abroad.

Generally, income from employment should be taxed in the country where the service is performed regardless of where the contract is signed or where the remuneration is paid.

Beginning with the Assessment Year 2004, income received in Malaysia from outside Malaysia is tax exempt. Therefore, taxpayers whether resident or non-resident in Malaysia are taxed on income derived from Malaysia only (Paragraph 28 (1), Schedule 6 of the Income Tax Act 1967). If you have worked overseas and the work carried out in relation to the employment carried out in Malaysia, then the income earned from employment will be taxable in Malaysia. You can visit the IRBM Official Portal, www.hasil.gov.my >> Internal Links >> General Provisions >> No.1 / 2011 - Taxation of Malaysian Employees Sent Overseas for further review.

Pursuant to the provisions of section 77 of the Income Tax Act 1967, every person (other than companies, trusts and cooperatives) is required to submit a BNCP to the Director General: -

Individuals who conduct a Business, Employment and Other Income
➢ before or on June 30

Individuals receiving Employment Income and Other Income (not doing business)
➢ before or on April 30

in the year following a year of assessment.

Provided:
● Have taxable income for the year of assessment; or
● Has no taxable income for the year of assessment but has taxable income or has submitted to BNCP or has been required to submit BNCP for the year of assessment before the year of assessment.

BNCP will be deemed successful when the e-Form Receipt Confirmation for the year of assessment is displayed.

You are not allowed to submit income tax forms more than once for a year of assessment. However, you are advised to submit an appeal letter (stating the mistake you have made), supporting documents and recalculating the branch handling your file. However, if the amendment involves an under-reported income or over-reporting that results in additional taxes or taxes, you will need to fill out the BE / B Amended Return Form. The Completed Statement of Form must be submitted to the IRBM branch which handles your income tax file.

Yes, you must submit a tax form by reporting the annual income in the Income Tax Return Form (BNCP) either manually or through the e-Filing application if you are not subject to PCB as a Final Tax.

You should refer to the Handbook to fill out the income tax form. Please refer to the official portal www.hasil.gov.my > Downloads> Forms / Info> Individuals> select Assessment Year> Handbook / Explanatory Notes.

You can contact the Kuantan Branch IRBM to request that your tax file be transferred to the Shah Alam Branch IRBM. You must notify the most recent Branch (in this case the Shah Alam Branch) of your address change in the future.

You can claim medical expenses for serious illnesses incurred by yourself, your spouse or children up to a maximum of RM6,000.00 per year and medical expenses for your parents up to RM5,000.00 per year. Your claim must be supported by the original receipt issued by the medical practitioner.

There is no limit on the number of children, however, only relief is provided for children under unmarried dependents where they are:

● under 18;
● if above 18 years of age, must be full-time or undergoing training or articleship in a company or profession; or
● physical or mental disability registered with the Department of Social Welfare (relief for children physically or mentally disabled is RM6,000.00).

You can contact the Appraisal Branch where your income tax file is registered and bring along your Form CP22B (Notice of Termination of Employment) that your employer has filled out. Please make sure that your employer submits Form CP22B to the appropriate IRB Assessment Branch, 6 months before your retirement.

You may claim a deduction for a donation made, however the donation must be made to a body or fund approved by the Director General. Most of these approvals (announcers via news) are stated on the donation receipt.

You can check the IRBM's official portal> Internal Links> List of Institutions or Organizations Approved Under Subsection 44 (6) of ITA 1967. The donation receipt must show the phrase "This donation is under subsection 44 (6) of ITA 1967".

Yes because a resident of Malaysia who has a taxable income is entitled to claim a tax rebate on the payment of zakat, tithe or otherwise required by Islam to the religious authority established under any written law. The amount of rebate allowed to an individual is limited to the amount of income tax imposed for the year of assessment.

● "Religious authorities established under any written law" include the Zakat Collection Center and the State Islamic Religious Council.
● "Written Law" means the legal enactment or legal instrument in force in Malaysia.

Zakat in question is all kinds of zakat payments made in a calendar year.

Section 132 - Refers to tax deductions relating to income from Malaysia taxable in Malaysia as well as outside Malaysia. Refer to the BE Form Handbook to determine which countries have made double tax evasion agreements with Malaysia. Calculations can be made in the HK-8 BE Form Handbook.

Section 133 - Refers to tax deductions for one party only in countries that do not enter into a double tax evasion agreement with Malaysia and which calculations can be made in the HK-9 Form BE Guidebook.

PCB as a Final Tax allows eligible taxpayers to opt-out of submitting BNCP by e-Filing or manual effective from the Year of Assessment 2014. Taxpayers with payroll only and PCB may choose not to fill and submit BNCP in accordance with the terms predefined.

The requirements of PCB as a Final Tax are:
● Has one source of income only under section 13 of ITA 1967, including Benefits In Kind (BIK) and Value of Living Accomodation (VOLA);  
● The PCB is deducted under the Income Tax (Deductions from Remuneration) Rules 1994 or no PCB is deducted because income below the deduction rate (PCB zero);
● Serving the same employer;
● Taxes are not borne by employers; and
● Husband or wife makes separate assessment choices.

Please refrain from gross employment (as in EA). The amount needed to be filled in the Statutory Income column (net of deductible professional deductions).

You can make calculations as per HK-4 (Property / Asset Details and Rental Amount) in the Form BE Guidebook to get a clean rent and this amount is transferred to the statutory rental income area. Alternatively, you can deduct that expense from the gross rent amount. Please make sure those expenses are expenditure authorized.

Pension income should be reported when:
● Retire before age 55
If you retire before the age of 55, your pension is eligible for income tax until you are 55 years old. Please fill in the pension income in the Pension, annuity and other periodic payments.
● If someone receives more than one pension, only the highest amount of pension is tax-exempt. Refer to Paragraph 16 of Schedule 6 of the Income Tax Act 1967.
● Pension issues received are tax-free.
Example: Wife / husband pension (issue) on spouse's death. This pension is not taxable.

You only need to fill out Form B only if you have a business income and you must return Form B by June 30th. Please enter your employment income in the same form B.

Yes, you are. The tax relief for this scheme contribution is effective for 10 years from the Year of Assessment 2012 to the Year of Assessment 2021. The exemption is limited to a maximum claim of RM 3000 for each Assessment Year.

You are entitled to a claim of RM 450 x 2 months = RM 900 only for the Year of Assessment 2012. Beginning with the Year of Assessment 2013, the amount of contribution per year is RM 5400 (RM 450 x12 months) but claims are limited to RM 3000 only. The amount contributed by the employer is not taken into account in determining the amount of the relief.

Income received by this private retirement scheme is exempted from tax under paragraph 20, Schedule 6 of ITA 1967.

Effective January 01, 2013, contributors will be subject to a final tax rate of 8% on early withdrawal before reaching the age of 55. This provision does not apply to expenditures caused by death or contributors leaving Malaysia permanently ( leaving permanently) .

Contributors will be subject to a final tax of RM 2400 (RM 30000 x 8%).

PRS providers ( private retirement schemes) need to deduct tax by 8% and remit to KPHDN within 1 month after making payment to you.

If the PRS provider has made the payment to the recipient without deducting the final tax of 8% and is willing to pay the final tax itself to KPHDN, then the PRS provider may recover the final tax amount from you.

PRS Providers refer to providers approved under section 139Q of the Capital Markets and Services Act 2007. Please refer to the Securities Commission Malaysia website for more information.

To determine the exact tax amount, a comparison must be made between the amount of the Monthly Tax Deduction (PCB) deducted and the tax payable. If the PCB paid is insufficient, then the amount of the difference (i.e. between the amount of the PCB and the tax payable) must be paid to the IRBM.

There are three (3) payment methods: -

a) Online through the ByrHasil app: https://byrhasil.hasil.gov.my/ Payment via internet banking with FPX member banks. This service uses FPX as a Gateway for taxpayers. Users need to have an internet banking account with any bank participating in FPX. Payment via VISA, Mastercard and American Express credit cards issued in Malaysia.

b) Through IRBM collection agencies
Payment at the Agent Counter
Internet Payment
Payment via ATM
Payment via Tele-Banking
Pay Through Check Deposit Machine
Cash Deposit Machine

c) Payment may be made by post to Center Kuala Lumpur, Kuching and Kota Kinabalu IRBM

The required payment information is:
● Income tax number
● Name and identification number
● Year of assessment
● Payment code
● Installment number
● Total payments

Payment receipts and bank slips must be kept for records and references.

Tax balance payment deadline for individuals who:
● Not doing business: before or on April 30
● Doing business: before or on June 30

Individual tax payment code is 084 or 095.

Payment of income tax via money transfer from abroad can be done in two
ways:
● Through Telegraphic Transfer (TT) / Interbank Transfer Giro (IBG) / Electronic Fund Transfer (EFT)
● Through Bank Draft

The PCB is a tax deduction based on the PCB Schedule on remuneration of eligible employees and is remitted to the IRBM on a monthly basis, while the CP38 deduction is only possible if the IRBM has issued specific instructions to employers to make deductions for certain amounts during certain months. CP38 deduction is to settle the outstanding tax while PCB is for tax for the current year of assessment.

The employer is responsible for making payment of the CP38 Deduction Order. Payment must be made in conjunction with the PCB but the employer must separate the payment amount in accordance with PCB and CP38 columns provided in Form CP39.

Please submit a CP502 form attached with the CP500 notice that has been sent to the taxpayer. The application for amendment of the installment payment must be made no later than June 30th of the year. Please submit an application to the IRBM branch where your income tax file is kept.

Late payment of the remaining 10% tax will be charged on the unpaid amount after April 30 of the year following the assessment year. If you still fail to pay the taxes and penalties imposed within 60 days from the date of the penalty, an additional 5% penalty will be imposed on the amount due.

You will receive a refund within the time period:

30 business days from the date of submission of the form if the form is submitted on or before the deadline for submission by e-filing.

90 business days from the date of submission of the form if the form is submitted on or before the deadline for submission of the form submission.

No need. Refunds will be processed within 30 working days of the e-Filing shipping case balance or 90 days postal delivery or handover balance.

The delay in processing of the refund may be due to the IRBM having to audit the Income Tax Return Form submitted by you. However, you are advised to contact the IRBM Branch which handles your file or Care Line Results for more information.

The refund will be processed after a late penalty is imposed on you.

You may contact the Branch where your file is being handled or the Branch Public Relations Officer or contact the Care Line Revenue at toll-free 03-8911 1000 (IRB) to review your refund status.

Dividend vouchers should not be sent unless requested by the IRBM officer handling your file.

The check will be processed within 14 business days from the date the refund is approved. If you still do not receive it after that period, please contact the IRB Branch which handles your file or Care Line Result online toll free 03-8911 1000 (IRB) for review.

You are asked to contact the Branch handling your income tax file or the Care Line Revenue online toll-free 03-8911 1000 (IRB) for replacement check issuance.

Gross business income is the receipt or payment received from a transaction involving the sale of trading stock or the provision of services. In determining receipts that may be considered or accounted for as gross business income, Section 12 (Section 12 provisions should also be read in conjunction with Section 3), Section 22, Section 24, Section 28 and Section 30 of the Income Tax Act 1967 (ITA 1967) in connection with the purpose and criteria of the acceptance.

The taxation of a business is not on the gross income of the business but on the profit or profit derived as provided by Paragraph 4 (a) of the ITA 1967. Profit or profit from business refers to an excess of the amount after the allowable expense is deducted from the gross income of the business.

Business interpretations under Section 2 of the ITA 1967 include profession, search and trade and any manufacturing, business or trade-related business but not employment. Subsection 2 (1) provides the broad meaning of the business in which each transaction must be viewed as to the purpose or motive of the transaction. A transaction may be considered a business if the transaction has trade characteristics or a trade pattern in the transaction.

In general, pre-operating or pre-business expenses of a person are not allowed as a deduction from gross business income because those expenses are not everything and are solely intended to generate that income.

However, Schedule 4B of ITA 1967 and the Rules issued by the Minister of Finance namely PU (A) 61/1992, PU (A) 111/1995, PU (A) 160/1996, PU (A) 475/2003, PU (A) A) 472/2005, PU (A) 135/2006, PU (A) 65/2007, PU (A) 361/2008, PU (A) 401/2009 and PU (A). 76/2012 authorizes deductions for certain expenses incurred prior to commencement of operations or business.

Companies can refer to the IRBM Official Portal at www.hasil.gov.my> Internal Links> General Ruling> No. 11/2013: Business Operations Expenses for further review of be allowed to companies as deductions from:

● Expenditure authorized in accordance with the general provisions of Section 33 of ITA 1967
● Expenses allowed in accordance with specific provisions or deductions such as Section 34, Section 34A, Section 34B Section 34C, Section 35 of ITA 1967; and
● Expenses authorized by Income Tax Method or by order of the Minister of Finance or other provision
● Subsection 33 (1) of the ITA 1967, provides that all and purely expenditure incurred in generating gross income from a source may be allowed as deductions from such gross income. The provisions of Subsection 33 (1) of ITA 1967 should be read in conjunction with the provisions of subsection 39 (1) of ITA 1967 in determining adjusted income.

Section 39 of ITA 1967 is a section that specifically describes expenditures that are not allowed as deductions from gross income of a source.

In determining adjusted business income, no deduction is allowed for expenses incurred on the asset or depreciation of the asset.

Tax deductions are provided in the form of Capital Allowance in lieu of depreciation expense for the purchase of assets used in the business, in determining the statutory income of a business source.

Capital Allowance is only given to the person making the Eligible Spend (PYL) on the assets used for his business purposes as provided under the Schedule 3 of the ITA 1967 and will only be deducted if claimed.

Capital Allowance is provided in the form of Initial Allowance (IA) and Annual Allowance (AA).

Eligibility requirements for Initial Allowance and Annual Allowance in respect of an asset for a year of assessment:

Initial Allowance (IA):
● Doing business within a basic period
● Perform PYL in basic period
● The asset is used for business purposes, and
● At the end of the base period (or if the asset is disposed of, at the time of disposal) he or she is the owner of the asset.

Annual Allowance (AA):
● Doing business within a basic period
● Perform PYL in basic period
● The asset is used for business purposes, and
● At the end of the base period, he is the owner of the asset and the asset is still used in his business

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling:

● No. 5/2014: Ownership and Use of Assets for the Purpose of EM Claims
● No. 12/2014: Eligible Plant And Machinery For EM Claims
● No. 6/2015: Eligible Expenditure And EM Calculations

Pursuant to Paragraph 7, Schedule 3 of ACP1967, Agriculture Allowance is one of the incentives or incentives provided to persons conducting business activities in the basic farming industry.

A person who has made a reasonable agricultural expenditure in connection with an asset and his business is entitled to claim an Agriculture Allowance for a year of assessment if he is the owner of the asset at the end of the base period and the asset is used in the garden or farm business.

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling> No. 1/2016: Agriculture Allowance.

Pursuant to Paragraph 8, Schedule 3 of the ITA 1967, Forest Allowance is one of the incentives or incentives provided to persons engaged in logging business activities.

A person who has been given a concession (a right granted by the government to a person to carry out a certain activity in a particular area) or a license and conduct a logging business is entitled to claim a Forest Allowance on the expenses incurred in the forest to build:

Roads or buildings used for the purpose of producing timber. As a convenience, the bridge or pier built for the business is also eligible for the allowance given; or

Buildings provided for the purpose of welfare or living quarters for the purpose of producing timber.

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling> No. 11/2014: Forest Allowance And Expenditure In Relation To Timber Production.

Industrial Building Allowance is an allowance provided for under Schedule 3 of ITA 1967 and provided at the expense of a qualified building whether to build or buy the building.

The types of buildings eligible for Industrial Buildings may be referred to in Paragraphs 63 to 66 of Schedule 3 of the ITA 1967 authorizing the Minister of Finance to determine the types of buildings eligible for industrial buildings and to determine their rates through the Income Tax Rules (EC) made under Subsection 154 (1) ITA 1967.

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling:

● No. 8/2016: Industrial Building Part I
● No. 10/2016: Industrial Building Part II

Reinvestment Allowance (Schedule 7A of ITA 1967) is a special incentive to encourage Malaysian companies to reinvest in business profits at the expense of qualifying to expand, modernize or automate existing business or diversify existing business into any related product in the same industry to increase the productivity of the company's products.

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling:
● No. 6/2012: Return on Investment Allowance
● No. 9/2017: Return on Investment Allowance Part I - Manufacturing Activities
● No. 10/2017: Part II Investment Allowance - Agricultural and Integrated Activities

Investment Tax Allowance is an incentive or tax incentive given on capital expenditure incurred on a periodic basis by companies participating or intending to participate in promoted activities or to produce promoted products / products. Investment Tax Allowance and Pioneer Status are "mutually exclusive" in which the company cannot enjoy both of these incentives at the same time and for the same activities.

The application and grant of ECP is within the jurisdiction of the Ministry of International Trade and Industry (MITI)

The Company may refer to Section 26 to Section 31 of the Investment Promotion Act 1986 (IPA 1986) for further review.

Pioneer Status is one of the incentives in the provisions of the Investment Promotion Act 1986 (IPA 1986). This incentive provides tax exemption on some or all of the statutory income of the relevant business given to companies planning to carry out promoted activities or promoted products in Malaysia. Pioneer Promotion and Investment Tax Allowance are mutually exclusive in that the company cannot enjoy both of these incentives at the same time and for the same activities.

Application and Grant of Pioneer Status is within the jurisdiction of the Ministry of International Trade and Industry (MITI)

The Company may refer to Section 5 to Section 25 of the Promotion of Investments Act 1986 (IPA 1986) for further review.

Transfer Pricing is a pricing system related to the transfer of goods, services and intangible assets between a business group within a multinational group of companies. Transfer pricing transactions can occur between multinational companies and subsidiary companies either in their own country (local transfer pricing) or transnational abroad (cross border) . This transaction is called a controlled transaction (controlled transactions) or related transactions (related party transactions) .

The selling price of a product that the parent company applies to the subsidiary may differ from the sale price of the independent party . This sale price is referred to as a transfer price.

Article 9, OECD On Income and On Capital Tax Convention Model - OECD defines related companies are:

A company that is directly or indirectly involved in the management, control or capital of a company; or

Both companies are under the same control

Section 139 of ITA 1967 provides that control is a controlling power of the company (directly or indirectly). Such authority is obtained by way of shareholding, voting power, power embodied in the procedure of the company or other document relating to the company.

The IRBM Transfer Pricing Guidelines apply when there are transactions between related multinational companies that are one business subject to Malaysian tax and another subject to foreign tax. The guidelines issued are based on the Arm's Length Principle as set out in the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations - OECD.

The Arm's Length Principle is an international standard for handling transfer pricing issues, this principle is explained in Article 9, the OECD Model Tax Convention. This article explains the basic principle that an associate enterprise should treat each business under its control as a separate company.

Transfer Pricing Guidelines can be obtained from the IRBM Official Portal at www.hasil.gov.my> Internal Links> Technical Guidelines> Price Transfer Guidelines (English version only) and Income Tax (Transfer Pricing) Rules 2012.

Investment Holding Company (IHC) means a company whose principal activity is investment holding and not less than 80% of its gross income other than the gross income from the source of the investment holding business (whether or not it is realized) derived from the holding of the investment.

Investment Holding Business means a real estate leasing business in which a company in any given year determines the maintenance or support services (provided comprehensive and active) in connection with the property.

Taxation services for Investment Holders are subject to whether or not the StockHolder is listed on Bursa Malaysia. Special tax services for Investment Holders are provided below:

● Section 60F of ITA 1967 of an Investor Holding Company not listed on Bursa Malaysia; and
● Section 60FA of ITA 1967 for Investor Holding Companies listed on Bursa Malaysia

Companies can refer to the IRBM Official Portal: www.hasil.gov.my> Internal Links> General Ruling> No. 10/2015: Investment Holding Company.

e-CP39 is a new way for employers to send their employees Monthly Tax Deduction (PCB) data and pay online.

Employers who do not have a payroll system and have previously submitted a CP39 form and make monthly tax deduction payments at the IRBM's counter or by mail and courier.

Here are the differences between the three systems:

● e-PCB is for employers who do not have a computerized payroll system. Employers need to register as a user to allow employers to store employee information, calculate PCBs, submit employee PCB data and make payments either online or at the bank's payment counter.
● e-Data PCB is for use by employers with computerized pay systems. Employers will need to register as a user to allow employers to review the format and upload the CP39 text file online. This system helps employers send employees PCB data according to the specification and make payment. Employers can make payments either online or at the bank.
● e-CP39 is for employers who do not have a computerized payroll system. Employers have the option to sign in to the system as registered or unregistered users . Calculation of PCB amount can be done through PCB Schedule, Table e or PCB Calculator. Employers can make payments either online or at the bank.

Payment can be made at the bank by using the CP39 / PCB Account Number generated during data validation in the e-CP39 system starting March 1, 2019 while online payments will start on June 1, 2019.

Financial Process Exchange (FPX) on the IRBM Official Portal (ezHASIL) through the e-CP39 system.

Internet banking
CIMB Bank Berhad
In addition to CIMB Bank (IBG / RENTAS / Telegraphic Transfer (TT) / Cash Transfer)
Bank Counter or Automated Teller Machine (ATM)
CIMB Bank Berhad - Cash Only
In addition to CIMB Bank (IBG / RENTAS / Telegraphic Transfer (TT) / Cash Transfer)
Cheque deposit machine, and cash deposit machine at CIMB bank network only.

(Please make sure the PCB Account Number (14 digits) is written on the back of the check before being entered into the check receipt kiosk)

Please use the following code for IBG / RENTAS / Telegraphic Transfer (TT) transactions

Employers can use the e-CP39 system either registered or unregistered . For registered users, the user must register the User ID and Password before logging in to this system.

Yes, yes. Employers can use the e-Schedule to determine the employee's PCB amount or make a calculation using the PCB calculator or refer to the PCB Schedule.

No need. The employer must set aside the amount of pay in the space provided by PCB and CP38.

IRBM will not issue an official receipt of the payment. The bank may use the bank's payment confirmation slip as proof of payment.

It is possible for the employer to calculate the PCB using the PCB Calculator.

You can. Employers can submit more than one payment and data transfer, especially for large employers. Employers need to ensure that only one payment instrument is available for each online data transmission.

You can. The same employer can be registered multiple times in the e-CP39 system. However, data that has been filled in by previous officials cannot be displayed because it uses a different ID.

Employers can still make payments as follows:

CIMB Bank Berhad Bank Counter - Cash only
Automated Teller Machine (ATM) CIMB only
Cheque deposit machine, and cash deposit machine at CIMB bank network only.

In addition to CIMB Bank (IBG / RENTAS / Telegraphic Transfer (TT) / Cash Transfer)

* Please make sure your PCB Account Number (14 digits) is written on the
back of your check before being entered into the check receipt kiosk.

You can. However, employee records and payments in e PCB or e PCB data already made will not be displayed in e-CP39.

If the employer is an e-CP39 registered user.

You can. However, employers or employees are advised to register their income tax reference number via e-Register as soon as possible.

Employers cannot make payments using more than one instrument for a CP39 delivery. If the employer has a limitation on the amount limit, the employer must ensure that the CP39 data fill and payment are within each director's approval limit.

If an employer uses the e-CP39 as a registered user, the system will keep a record of the employee's list including data transmission and payments previously made by the employer.

There is no limit to the number of employees. However, employers are encouraged to use e-PCB if they have large numbers of employees.

The account number that you need to enter in the CDM is the PCB / CP39 account number listed in the e-CP39 Authentication Slip. The employer must keep the account number behind the check at the time of payment.

The date of data transmission and payment of PCB by e-CP39 is not necessarily the same date. However, the employer must make the PCB payment on or before the 15th of each month.

Employers can call the Care Line Revenue (HCL) at 03-8911 1000 or the Employment Unit at the nearest IRBM Branch. Reference Manual User's Guide, available at https://ecp39.hasil.gov.my/login