Audit & Assurance

How much is my company’s auditors’ fee cost?
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.

Personal Income Tax (Including Business Owners)

Should you use a free tax-filing option to prepare and file your own taxes, or should you pay someone to do them for you? And if you do pay how much?

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.
Private Retirement Scheme (Private Retirement Scheme)
I started contributing to the private retirement scheme in October 2012. Am I eligible for this contribution?
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.
Pay Income Tax
If I am taxed, what is the actual tax amount I have to pay?
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.
When will I receive a refund of my current year's tax credit surplus?
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.

Company Income Tax

(a) Gross Business Income
What does a gross income mean for a business?
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.
(b) Pre-business expenses
Are pre-operating expenses or business start-ups incurred by the company, allowed for deductions from gross business income?
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.
(c) Unauthorized Spending
What is the meaning of Section 39 of ITA 1967
Section 39 of ITA 1967 is a section that specifically describes expenditures that are not allowed as deductions from gross income of a source.
(d) Claims Allowance
i. Capital Allowance (CA)
What does Capital Allowance mean?
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).
ii. Agriculture Allowance (AA)
What does Agriculture Allowance mean?
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.
iii. Forest allowance
What does Forest Allowance mean?
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.
iv. Industrial Building Allowance (IBA)
What does the Industrial Building Allowance mean?
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.
(e) Tax Incentives
v. Reinvestment Allowance (RA)
What is the meaning of a Reinvestment Allowance?
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.
vi. Investment Tax Allowance (ITA)  
What does Investment Tax Allowance mean?
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.
(f) Pioneer Status (PS)
What does a Pioneer Status mean?
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.
(g) Transfer Pricing
What does Transfer Price mean?
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.
(h) Investment Holding Company (IHC)
What does the Investment Holding Company mean?
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.

Employer’s Tax Responsibility

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


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