Tax Policy and Tax Administration Solutions Presenter : Abdul Manap bin Dim IRB Malaysia

1. ITD Asia Conference by IRB Malaysia • Tax Policy and Tax Administration Solutions • Presenter : • Abdul Manap bin Dim • IRB Malaysia • “Key finding of Compliance Cost and what • actions had been taken by IRM to reduce compliance cost”

2. ITD Asia Conference by IRB Malaysia INTRODUCTION Compliance cost is the cost expended by the taxpayers in fulfilling the requirements imposed on them by the law and the Inland Revenue authorities, over and above the actual payment of tax. Therefore, in order to comply with tax regulations, taxpayers need to incur not only the amount of tax payable but also other incidental costs.

3. ITD Asia Conference by IRB Malaysia INTRODUCTION (con’t) INTRODUCTION (con’t) Compliance cost is incurred not only by taxpayers but also by those who are required to collect the taxes on behalf of Inland Revenue Board (IRB). For example, in Malaysia, employers are required under the Schedular Tax Deductions (STD) scheme to deduct tax from their employees’ salaries on behalf of the IRB.

4. ITD Asia Conference by IRB Malaysia TYPES OF COMPLIANCE COST Compliance cost can be divided into two categories. The first category is indirect cost and it is based on the time spend for each type of jobs. The second category is on the specific cost incurred where we could directly ascertain the monetary amount.

5. ITD Asia Conference by IRB Malaysia INDIRECT COST • Record keeping for income tax purpose. • Understanding of tax return systems, law and • regulations. • Tax planning and researching the income tax • literatures. • Completing tax return, submitting tax return and • payment of taxes. • Time spend on activities associated with tax • objection, inquiries and appeal. • Time spend on activities associated with tax audit. • Attending tax seminars.

6. ITD Asia Conference by IRB Malaysia DIRECT COST • Hiring of tax advisor. • Purchasing of books or any tax related materials. • Travelling and postage. • Stationery/photocopying. • Purchasing of tax software. • Telephone and internet cost.

7. ITD Asia Conference by IRB Malaysia TIME SPEND ON INDIRECT COST • A great amount of time is spent by taxpayers in preparing and keeping records, as this is a requirement of the law with the introduction of Self Assessment System (SAS).

8. ITD Asia Conference by IRB Malaysia DIRECT MONETARY COSTS One of the highest costs is the cost of hiring a tax advisor for the preparation of the tax returns.

9. ITD Asia Conference by IRB Malaysia INITIATIVES TAKEN BY IRB TO REDUCE COST OF COMPLIANCE

10. ITD Asia Conference by IRB Malaysia INITIATIVES TAKEN BY IRB TO REDUCE COST OF COMPLIANCE

11. ITD Asia Conference by IRB Malaysia INITIATIVES TAKEN BY IRB TO REDUCE COST OF COMPLIANCE

12. ITD Asia Conference by IRB Malaysia INITIATIVES TAKEN BY IRB TO REDUCE COST OF COMPLIANCE

13. ITD Asia Conference by IRB Malaysia INITIATIVES TAKEN BY IRB TO REDUCE COST OF COMPLIANCE

14. ITD Asia Conference by IRB Malaysia • CONCLUSION

15. ITD Asia Conference by IRB Malaysia • THANK YOU