Self Assessment System in Malaysia

Self-assessment for Individuals

Under self-assessment for individuals which was implemented in 2004, individuals (partnerships, proprietors and salaried individuals) are required by section 82 of the Income Tax Act (ITA), 1967 to fulfill the following responsibilities; first, for an individual who is doing business is supposed to keep and retain sufficient records for a period of 7 years as well as keeping printed receipts with serial number for sale of goods exceeding RM 150,000 or for providing services for a value exceeding RM 100,000. Second, individuals who receive income from either employment or investment are required to keep sufficient documents such as statement of income, expenditure, invoices, receipts and vouchers for a period of 7 years [Section 82 A (1)] (Lee et al, 2007).

The above stated documents are retained in order to facilitate field audit, which aims at ensuring that the estimated tax liability and the amount paid has been properly accounted for. Third, according to Lee et al, (2008), individuals without business income are required to submit their tax return (Form BE) by 30th April of the following year, and (Form B) by 30th June the following year for those with business income. The tax return submitted will be deemed assessment for the Director General. And last, an individual is required to settle any balance of income tax payable on the same day.

Self- assessment for Companies

Under self-assessment for companies, companies are required to carry out the following duties. First, companies are required to estimate the income tax payable [s 107C (2)]. According to Lee et al, (2008), the estimation of tax payable is supposed to be submitted not later than 30 days before the beginning of the basis period and the estimation of tax payable a year of assessment must not be less than the revised estimation of income tax payable for the previous year of assessment. However, with effect from year of assessment 2006, companies are permitted...