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The Malaysian Inland Revenue Board (“MIRB”) has issued an updated Tax Audit Framework (“the Framework”) which replaces the Tax Audit Framework dated 1 April 2018. The Framework comes into effect on 15 December 2019.

The updates made under the Framework amongst others are that the MIRB can make visits to the premises of a taxpayer or the taxpayer’s related business by giving notice in advance (replacing the previous notion that the MIRB can make visits without first informing the taxpayer) and inclusion of a paragraph that a letter ‘Surat Penentuan Permulaan Tempoh Penyelesaian Kes’ will be issued to the taxpayer to inform of the starting period of audit completion if no audit visit is made. 

We also wish to highlight below the notable updates to the Framework:-

Audit cases are to be completed in 90 days from the start of the date of audit visit or the date the ‘Surat Penentuan Permulaan Tempoh Penyelesaian Kes’ is issued;

Taxpayers are to surface the appointment letter for the registered tax agent representing them;

For the purpose of the Framework, a penalty of 45% on the tax undercharged is imposed for offence under subsection 113(2) of the Income Tax Act, 1967 (“ITA, 1967”). However, the Director General may use his power under subsection 124(3) of the ITA,1967 to abate or remit the penalty imposed; and

Penalty of 55% on the tax undercharged will be imposed on repeated offence by taxpayer after having undergone audit or investigation. Repeated offence in this case is in relation to a taxpayer who has been audited or investigated and the original or additional or composite assessment with penalty under subsection 113(2) of the ITA, 1967 was raised. The first offence to be accounted for is from the date of the notice of assessment raised beginning 1 January 2020.

In view of the above updates, it is important for taxpayers to continue to enhance the quality of their documentation and accounting records and effectively evaluate their readiness to be selected for audit at any time. This is critical to avoid being imposed a hefty penalty.

Taxpayers may choose to manage this issue by undertaking a tax risk assessment to have a better understanding on their tax position. 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Contact KPMG

For further enquiries, you may contact Soh Lian Seng at +603 7721 7019 or any of the Tax Dispute Resolution team members whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization at the respective contact details below. 

Petaling Jaya Office

Tai Lai Kok
Executive Director –
Head of Tax and Head of Corporate Tax
ltai1@kpmg.com.my
+ 603 7721 7020

Long Yen Ping
Executive Director –
Head of Global Mobility Services yenpinglong@kpmg.com.my
+ 603 7721 7018

Bob Kee
Executive Director –
Head of Transfer Pricing
bkee@kpmg.com.my
+ 603 7721 7029

Ng Sue Lynn
Executive Director –
Head of Indirect Tax
suelynnng@kpmg.com.my
+ 603 7721 7271

Soh Lian Seng
Executive Director –
Head of Tax Risk Management
lsoh@kpmg.com.my
+ 603 7721 7019

Nicholas Crist
Executive Director –
Corporate Tax
nicholascrist@kpmg.com.my
+ 603 7721 7022

Dato’ Leanne Koh
Executive Director – 
Corporate Tax
leannekoh@kpmg.com.my
+ 603 7721 7026

Neoh Beng Guan
Executive Director – 
Corporate Tax
bneoh@kpmg.com.my
+ 603 7721 7025

Ong Guan Heng
Executive Director – 
Corporate Tax
guanhengong@kpmg.com.my
+ 603 7721 7027

Chang Mei Seen
Executive Director – 
Transfer Pricing
meiseenchang@kpmg.com.my
+ 603 7721 7028

Ivan Goh
Executive Director – 
Transfer Pricing
ivangoh@kpmg.com.my
+ 603 7721 7012

 

 

 

Evelyn Lee 
Executive Director –
Penang Tax
evewflee@kpmg.com.my
+604 238 2288 (ext. 312)

Regina Lau
Executive Director –
Kuching & Miri Tax
reglau@kpmg.com.my
+6082 268 308 (ext. 2188)

Titus Tseu
Executive Director –
Kota Kinabalu Tax
titustseu@kpmg.com.my
+6088 363 020 (ext. 2822)

Ng Fie Lih
Executive Director –
Johor Bahru Tax
flng@kpmg.com.my
+607 266 2213 (ext. 2514)

Crystal Chuah Yoke Chin
Tax Manager –
Ipoh Tax
ycchuah@kpmg.com.my
+605 253 1188 (ext. 320)