Income Tax Audit

Income Tax Audit

Introduction

Every company will subject to IRB’s income tax audit in every 3 to 5 years. This audit is to exam and check tax payer’s business records and financial affairs to ascertain that the right amount of income should be declared and the right amount of income tax should be calculated and paid in accordance with income tax law and regulations.

There are two types of income tax audit:

Desk Audit

Tax payer will receive a formal letter from IRB. This letter will clearly state the documents to be examined and the grace period for tax payer to prepare and submit these documents to IRB branches. Tax payer may apply for extension of time if they feel that there is no sufficient time to prepare these documents. This audit will be conducted in IRB office, the IRB officer in charge will inform tax payer on their finding on documents, specific desk audit cases can be referred for field audit action.

Field Audit

Tax payer will receive a formal letter from IRB. This letter will clearly state the time and date that the IRB officers will visit tax payer office/house and also the extent of audit (e.g. Year of assessment to be examined). Tax payer will be interviewed by the IRB officer during this audit. Tax payer need to prepare all necessary documents as requested by the IRB officer.

We would like to emphasis that Tax Evasion is prohibited in Malaysia. IRBM will imposed heavy penalties (or imprisonment or both) to tax payer if they found out there is any tax evasion activities. Thus, we will not help our client in tax evasion. We believe that as a good citizen, every tax payer shall pay their income tax based on their chargeable income as indicated by Income Tax Act 1967.