Companies are bucking up to meet TAX laws
More small businesses are trying to get their house in order as the Inland Revenue Board (IRB) steps up efforts in conducting audits.
Companies are more concerned now. Some businesses, which previously did not have proper systems, are now setting up a Sdn Bhd and getting things in order.
Higher participation of SMEs at its seminars as more companies are looking to equip themselves with the technical knowledge to comply with tax laws.
Recent IRB Tax Efforts
Last year, Prime Minister Datuk Seri Najib Razak announced the establishment of the Collection Intelligence Arrangement (CIA) under the Finance Ministry (MOF). The CIA will enable the sharing of data among the IRB, Royal Malaysian Customs Department and Companies Commission Malaysia (SSM) to reduce tax leakage and improve efficiency.
In August 2017, the Customs Department and IRB inked a standard operating procedure (SOP) for the joint audit programme that will see them conduct joint audits as well as share information on companies to improve the collection of GST and corporate tax. The joint audits are limited to companies in the Klang Valley for now but would soon be extended nationwide.
The challenge for SMEs？
The challenge for SMEs in complying with tax laws is their inability to differentiate deductible and non-deductible expenses.
Being audited is a common thing and it is something that should be expected by companies. Not every audit means you did something wrong. It is just likely that the company is in a higher-risk category for under-declaration. Cases can be closed without a problem if everything is in compliance.
Difference between tax audit and tax investigation?
A tax audit is done to check that a company has paid the correct amount of tax.
A tax investigation, on the other hand, is a more severe approach taken by the authorities to find out how much tax a company has evaded.
However, majority of companies that are audited do end up getting fined as most don’t have the full knowledge to be compliant.
Industries that deal more with cash have a higher tendency for non-compliance.