The Key Responsibilities of Malaysian Taxpayers in the Process of Tax Compliance

Running Head: TAXATION 1
The Key Responsibilities of Malaysian Taxpayers in the Process of Tax Compliance
Name
Institution

TAXATION 2
The Key Responsibilities of Malaysian Taxpayers in the Process of Tax Compliance
1.0 Introduction
In the recent past, the Malaysian tax system introduced a new tax system by shifting from the
Official Assessment System (OAS) and adopting the Self-Assessment System (SAS). It is worth
pointing out that the new system brought about a considerable shift of the responsibility from the
government to the taxpayers (both individual and corporate) with regards to their compliance
objectives (Sapiei & Kasipillai, 2013). Specifically, the new systems created additional
compliance responsibilities for the taxpayers such as the duty to report, compute, and pay their
taxes according to the Malaysian tax laws (Okello, 2014). Additionally, the taxpayers are also
responsible for maintaining proper records as well as retaining the records in safe custody. The
key objective for introducing the new tax system was to increase the collection rate, encourage
voluntary compliance among citizens and minimize the costs of tax collection.
2.0 Key Responsibilities of Taxpayers
2.1 Notification of Chargeability
Individual Taxpayer.
According to Malaysian tax law S77(3), whenever a person arrives in the country during a
calendar year, and he or she is liable to tax to in Malaysia for that given year or for the year that
follows, they should inform the DG that they will be so chargeable within a period of two
months after their arrival. It is worth pointing out that this responsibility is applicable despite the
fact that the individual may be a tax resident or a non-tax resident in the country. Notably, this

TAXATION 3
duty to notify the DG on chargeability applies as long the person gains income that is subject to
tax in the country.
Corporate taxpayers
Unlike the individual taxpayer, the corporate taxpayer is not charged with the responsibility of
initiating a notification of chargeability to the Director General according to the tax rules and
regulations of Malaysia.
2.2 Furnishing Returns
Individuals
According to S77 (1) every resident with a chargeable income in a particular year of assessment
must provide a tax return in the recommended form B or Form BE (ACCA Global, n.d.).
Important to note is that this furnished tax return must also be filed by 30th June of the following
year if he operates a business (ACCA Global, n.d.). Alternatively, the same may be filed on 30
April of the next year if the individual earns income from other non-business income generating
activities (ACCA Global, n.d.).
Corporate
Likewise, in S77A(1) corporate entities such as LLPs, companies and trusts are charged with the
responsibility of supplying their annual tax returns within 7 months after the close of their
financial year that constitutes the basis period for the period of assessment. Additionally, a
corporate entity is expected to file its tax returns through an electronic transmission or medium.
Furthermore, these returns must be audited by a professional accountant (ACCA Global, n.d.).