IRB TAX INVESTIGATION...
Transcript of IRB TAX INVESTIGATION...
ABANG EHSAN
ABANG ABU BAKAR
Division Director
Large Taxpayer
Branch,
IRBM
26TH FEBRUARY 2019
IRB TAX INVESTIGATION FRAMEWORK &
MECHANISM
TOPICS COVERED
Number of
Taxpayers
02
Audit
v/s
Investigation01
Tax
Investigation
Framework 05
Strategies:
Non
Compliance
What is the
difference?1 H & 4 W
Fairness to
compliant
taxpayers
04
Voluntary
Disclosure
Special Voluntary
Disclosure
Programme
03
Common
Pitfalls
Property
Developers &
Contractors
3
TAX INVESTIGATION FRAMEWORK
PROCEDURES ON TAX INVESTIGATION
RIGHTS & RESPONSIBILITIES OF:
TAX OFFICERS
TAXPAYERSTAX
AGENTS
TAX LEGISLATION
SECTION 78 : Specific returns and
production of books
01
02
03 04
SECTION 79 : Statement of bank
accounts, etc.
SECTION 80 : Access to buildings
and documents, etc.
05
SECTION 81 : Information
SECTION 112 : Failure to furnish return
SECTION 113 : Incorrect returns
SECTION 114 : Wilful evasion
INVESTIGATION ACTIVITIES
01 Inspection of books, documents, objects,
articles, materials & things – business &
personal
02 Collect evidence for any legal proceedings
03 Investigation according to AMLATFPUAA –
offences under S112 / 113 / 114 ITA 1967(2)
04 To inform taxpayer: IRB investigation /
AMLATFPUAA / both
6
OBJECTIVES OF INVESTIGATION
1. Collect the correct
amount of tax
4. Deter Tax Evasion
3. Enhance voluntary
compliance
2. Identifying &
prosecute tax evaders
5. Fairness to compliant
taxpayers
7
PERIOD OF INVESTIGATION
SECTION
91 (3) ITA
1967
No limitation for the period
covered in cases of fraud,
wilful default or negligence
8
SELECTION OF CASES
1. Risk Analysis
Informers
2. Analytics Analysis :
Information from other law
enforcement agenciesInternal Profiling
Information
Return Forms
UNEXPLAINED EXTRAORDINARY WEALTH
10
INVESTIGATION PROCESS
11
RIGHTS AND RESPONSIBILITIES
IRBM
OFFICER
TAXPAYER TAX AGENT
12
CONFIDENTIALITY OF INFORMATION
All information obtained from the
taxpayer during investigation and use
the information ONLY for the purpose
of Income Tax or another tax law
13
PAYMENT PROCEDURES
• Taxpayer Is Encouraged To Make Full Payment Of Taxes & Penalties Assessed In One Single Payment
• Installment Payment Plan -25% Of The Total Tax Liability As Initial Payment
• Failure To Settle Tax Liability-Increased Under Subsection 103(7) And 103(8) ITA
CIVIL SETTLEMENT
• On Conviction The Accused Is Required To Pay A Fine And / Or Special Penalty According To Court’s Decision
• Tax Liability Must Be Paid To IRBMPROSECUTION ACTION
14
APPEALS
SECTIONS 99 TO 102 OF THE INCOME TAX ACT LAY THE GROUND RULES FOR APPEALS RELATING TO ASSESSMENT RAISED BY IRBM
AUDIT VS INVESTIGATION
Tax Guidlines
2007 - P.U.(A)
276 & 277
Public Rulings
No.2/2009 –
Constructions
Contracts
FRS 201 –
Property
Development
Activities
MFRS 111 –
Construction
Contracts
1 April 2018
Audit Framework
1. Reduce tax liabilities in an
impermissible way.
2. Upholding rule of law to ensure
minimum tax leakages.
Tax avoidance
1. Verify accuracies of tax
computation
2. Ensure that a tax audit is carried
out in a fair, transparent and
impartial manner.
Audit objectives
16 May 2018
Investigation Framework
1. Illegally avoiding tax liabilities
2. Attempt to evade tax liability by
unfair means
3. Omitting income liable to tax
Tax evasion
1. Ascertain failure to furnish return
or give notice of chargeability
2. Submission of incorrect returns /
willful evasion
Investigation objectives
COMMON PITFALLSPROPERTY DEVELOPERS &
CONTRACTORS
ACTS AND LEGISLATION
TAXATION
Tax Guidlines
2007 - P.U.(A)
276 & 277
INCOME TAX ACT
(ITA) 1967
Public Rulings
No.2/2009 –
Constructions
Contracts
Public Rulings
No.1/2009 –
Property
Development
ACCOUNTING
MFRS 15 –
Revenue From
Contracts With
Customers
w.e.f. 01.01.2018
MFRS 118 –
Revenue
FRS 201 –
Property
Development
Activities
MFRS 111 –
Construction
Contracts
01 02 03 04
01 02 03 04
PROPERTY DEVELOPERS
Organizational Chart Details on Projects Layout Plan
Development Approval C.F.O Project Cost Listing
Schedule on Recognition of Income List of purchasers for each project Stock Listing
CONTRACTORS
Organizational Chart Details on Projects Letter of Award / V.O
C.P.C Statement of Final Account Project’s Cost Schedule
Schedule on Recognition of Income LAD Other Related Details
COMMON PITFALLS
Recognition of Income Expenses
Cost of projects Others
VOLUNTARY SETTLEMENTSpecial Voluntary Disclosure Programme
Tax Reform Voluntary
Disclosure
WHEN
WHAT
WHO
Income reported for YA 2017 &
preceding years
1. Income Tax Act, 1967
2. Petroleum Income Tax Act, 1967
3. Real Property Gains Tax 1976
4. Stamp Act 1949
Types of taxpayers
1. Non registered taxpayers
2. Registered taxpayers but have not submitted ITRF
3. Registered taxpayers, filed in ITRF but did not report
correct information on income or disposal of assets
4. Persons who failed to pay stamp duty on instruments
after 6 months from stamping period
Period / Penalty
1. 3 November to 31 Mac 2019 – 10%
2. 1 April to 30 Jun 2019 – 15%
3. 1 July 2019 onwards – 80% till100% or 300%
Efficient tax system
1. Broaden tax base
2. Increase compliance rate
3. Increase revenue
4. Instill public confidence in
the tax system
COMMON PITFALLSHealth check
Mathematical error
Double & triple check your computation
Non Compliance
Failure to comply with any provisions of the
Income Tax Law
Failure to report all income
Mismatch with available information of
income received
Slacking on record keeping
Authenticity of transaction
Prolonged business losses
How long can a company survive with
negative equity? Loss to be carried forward
or transfer within the group
Huge tax refunds
Subject to full audit prior to refunds
STRATEGIES TO COMBAT NON COMPLIANCEFairness to compliant taxpayers
Audit & Investigation.
Enhance enforcement activities
Hasil Power Data
Increase the use of technology
CbCR, CRS, AEOI. & collaboration with
related agencies like JPJ, BNM, CCM
Increase in information
domestically & internationally
Active participation at OECD
Commitment to BEPS
CAT IRB workforce
Training
Increase exposure to international laws.
Greater awareness & interaction
between domestic & International law
WAY FORWARDMalaysia A New Dawn
1. Register in the tax system
2. Assess tax liabilities accurately
3. File tax returns in time
4. Pay the right amount
Responsible taxpayers
1. Assist taxpayers in their tax obligations
2. Advise taxpayers on any tax issues
3. Facilitate improvement of tax compliance
Registered tax agents
1. Collect taxes for the government
2. Verify the accuracies of tax returns
3. Conduct enforcement activities
4. Engaging with taxpayers / tax agents to enhance tax
compliance
Efficient tax system
Taxpayer
Tax Agent
Tax Authority
NAVIGATING A NEW TAX LANDSCAPE