The intersection of accounting and taxation in Malaysia

The article describes the development of accounting and tax law in Malaysia, and discusses the similarities and differences between those two systems

An analysis of the gap between accounting depreciation and tax capital allowance in Malaysia

Malaysian tax system includes a tax depreciation rule separate from accounting depreciation.This paper is to compares and contrasts the accounting treatment of depreciation and the tax treatment of capital allowance.The gap between the accounting and tax is resulted from different definitions of capital expenditure and qualifying asset and also different deduction rate and useful life used in calculating depreciation.This paper proposes the government to revise the current capital allowance system

Tax knowledge and compliance behavior under Self-Assessment System(SAS): perception of students from higher education in Malaysia

Tax non-compliance is a subject that has attracted substantial discussion not only within policy circles but also within the academia. The non-compliance issue is very important as the compliance rate will affect the revenue collection from taxpayers of a country. In view of the importance of tax compliance behavior, the present study aims at (1) examining the level of tax knowledge, attitudes and subjective norms, and intention towards tax compliance, (2) comparing the level of tax knowledge and the intention towards tax compliance between those with tax knowledge via formal tax education and those without formal tax education, and (3) investigating factors influencing tax compliance intention based on Theory of Reasoned Action. The study adopts a survey methodology and gathers a sample of diploma and undergraduate students from fourteen higher institutions of learning in Malaysia, a total of 417 were received and usable (92% response rate). In order to achieve the research objective, T-test, Pearson’s correlation analysis and multiple regression analysis were performed. The findings suggest that the level of tax knowledge among the students is moderate and those who have been exposed to formal tax education possess more tax knowledge. Similarly, those who have been exposed to formal tax education have higher intention towards tax compliance. The findings further reveal that tax knowledge, attitudes and subjective norms are significantly and positively correlated with intention toward tax compliance. It is further noted that, while tax knowledge is positively correlated with intention towards tax compliance, it lacks significance once the roles of attitudes and subjective norms are analysed in the multiple regression setting. Perhaps, tax knowledge plays an indirect role in shaping attitudes of the future taxpayers towards tax compliance intention. Instead, attitudes and subjective norms are found to be most influential and to have predictive ability for intention toward tax compliance. The result of the current study may contribute to policy makers, academics and tax administrators especially in developing tax education programmes to increase the awareness and tax knowledge among students (future taxpayers) and consequently, to enhance tax compliance rate and to reduce compliance cost

The role of tax agents in sustaining the Malaysian tax system

In Malaysia, a self-assessment system has been implemented for all companies for more than a decade.The system necessitates corporate taxpayers to declare and calculate accurate sources of income, estimate income tax payable, keep records for audit purposes, and comprehend income tax legislation.In complying with these demands, many corporate taxpayers have to depend on the assistance of tax agents.Using survey data, this study aims to examine the role of tax agents in sustaining the SAS in Malaysia.This study enhances the understanding of the scope of tax agents’ involvement under the system. Findings from this study are predominantly positive and should be beneficial for policy makers in their efforts to review and modify current tax systems

A cross-cultural study of religiosity and tax compliance attitudes in Malaysia and Turkey

Ensuring compliance in tax collection is very crucial as tax is one of the basic elements of public financing in almost all countries. The issue of compliance in tax research has been explored over many years from different perspectives. Initially, it started with a negative assumption of taxpayers’ compliance attitudes and recently the research has shifted to a more positive attitude of taxpayers. One of the factors that is expected to shape taxpayers’ compliance attitudes is religiosity. Even though a number of studies have started to explore this issue recently, not many studies have used primary data because the majority of the studies were relying on secondary data. Therefore, this study is comparing the impact of religiosity and its components on both tax compliance components, voluntary and enforced tax compliance, in Malaysia and Turkey. Surveys distributed to individual taxpayers were used in both countries. Religiosity is found to have a significant impact on voluntary tax compliance that influences taxpayers’ positive attitudes in both countries. Even though religiosity seems to be an influential factor with respect to tax compliance behaviour, this study has shown that in certain circumstances, it might appear irrelevant

Graduate employability among low academic achievers

This study aims to provide insights on how and why a specialised training programme could help graduates with low performance to compete fairly in the job market. This study used an action research design, where a total of 12 graduates with low academic achievement were trained under a specialised training programme consisting of two phases within the period of ten months. Despite having low academic achievements in terms of Cumulative Grade Point Average (CGPA), the employability opportunities of those graduates were high as they were equipped with the highly sought after GST knowledge and certification and various important soft skills such as time management, communication, analytical skills and leadership. This study demonstrated that engaging graduates in a specially designed program that aimed to enhance their technical knowledge and soft skills coupled with some work experience is indeed a value added strategy to enhance graduates employability. This is particularly applicable to those who are low achievers as it provides them with some kind of competitive advantages. The findings suggest that despite having low CGPA, their employability opportunities, particularly in the accounting and commercial industries, were relatively high. This study provides some guidance to policymakers and educators on how universities and industries may collaborate to mitigate unemployment issues among the accounting graduates

An analysis of Malaysia's corporate income tax expenditures and negative income tax expenditures using accounting standards as the benchmark tax base

Tax expenditures are government indirect spending, hidden in the tax system, often used to support government’s social and economic objectives. Instead of directly allocating money for a particular objective, the government forgoes tax revenues from those who undertake activities that could achieve the objective. Therefore, tax expenditures should be analysed as government spending programs. Tax expenditure reporting and analysis has been a regular practice among many countries in the world, especially in developed countries, to ensure efficient and effective allocation of government resources and enhance government’s transparency. Unfortunately, despite having lavish tax incentives, the Malaysian government has not produced a tax expenditure report. As a result, tax expenditures are mistakenly analysed as aspects of the tax collection system rather than as part of spending programs. This thesis sets a foundation for tax expenditure reporting and analysis in Malaysia by identifying and analysing tax expenditures of Malaysia’s corporate income tax arising from all sources of tax law – tax legislation, case law and administrative practices. In addition, this thesis also identifies and analyses negative tax expenditures that provide disincentives to government-disfavoured activities. The main objective of this thesis is to determine whether particular corporate income tax expenditures or corporate negative income tax expenditures should be removed, maintained or modified using the conventional tax expenditure analysis. Prior to identifying tax expenditures, elements of a benchmark tax structure are developed. This thesis contributes to new knowledge by proposing Malaysian accounting standards as the benchmark tax base to identify corporate tax expenditures. Any tax rules that deviate from the benchmark tax structure are analysed as tax expenditures (if they lower tax payable) or negative tax expenditures (if they increase tax payable). Conventional tax expenditure analysis commences with an assertion of (or speculation about) the apparent objective of each of the tax expenditures and negative tax expenditures being assessed, asking first whether there are justifiable reasons for the government to intervene in the market by offering subsidies or imposing penalties based on taxpayers’ behaviour. If government intervention can be justified, the next step is to propose the optimal vehicle to achieve the objective. The findings of this thesis reinforce doubts held by some about the effectiveness of tax expenditures as tools to promote government objectives. A number of the tax expenditures identified appear to be redundant, providing government support for companies to undertake actions that they would likely do even without the tax expenditures. Most tax expenditures in Malaysia are not accurately targeted; they only benefit profitable companies and thus miss many enterprises most in need of assistance. There are also tax expenditures that have lost their relevancy, including a few that were inherited from the British tax system. They have been forgotten or accepted as part of the normative tax system, and are left in the legislation with no revision. Most negative tax expenditures that are explicitly legislated have plausible reasons to stay in the tax system. However, implicit negative tax expenditures that stem from strict judicial interpretations have led to the denial of deductions for some normal business expenses. This is unfair to businesses. Overall, this thesis demonstrates the importance of tax expenditure reporting and analysis, particularly in Malaysia, to help the government in managing its resources and formulating better policies

Tax expenditure reporting: towards a more transparent government budget

Tax expenditures are a substitute to government direct spending. Therefore, they should be reported and analysed on the spending side of the budget. Failure to understand the concept of tax expenditures would lead to tax expenditures being mistakenly analysed as the revenue function and escaped the detailed scrutiny that should have been placed on direct spending. This article explores the concept of tax expenditures as posited by the late Professor Stanley S Surrey. It also discusses the arguments that oppose and support the use of tax expenditures, and the different methods that can be applied to measure tax expenditures in monetary terms. Finally, this article discusses the importance of tax expenditure reporting from a revenue perspective and outlines the steps involved in the preparation of a tax expenditure report