In November 2017, the minutes of the working group meeting between the IRB with accounting and tax bodies (DESIRE Dialogue No. 1/2017) was published. The minutes contain, amongst others, comments from the IRB in response to queries regarding the operation of tax audits by the IRB.
Some of the clarifications provided by the IRB include the following:
(a) Increase in tax investigations
The IRB commented that the increase in tax investigations (i.e., field audit visits without prior notifications to the taxpayer) are carried out to increase the rate of compliance by taxpayers. Such surprise visits are generally targeted at non-cooperative taxpayers or high risk taxpayers.
(b) Repeated audits on the same years of assessment
The Chartered Tax Institute of Malaysia (CTIM) raised the issue that some taxpayers which have already been subject to a field audit for a particular year of assessment and for which additional assessments were issued and paid, would subsequently be notified of a further desk audit being conducted by a different team of officers for the same year of assessment.
The IRB, in its response, clarified that a second audit may be conducted on the same year of assessment if it is found there are new issues and findings.
(c) Issuance of notices of additional assessment without prior notification of audit
CTIM commented that there have been instances of taxpayers receiving notices of additional taxpayers without any prior notification from IRB that an audit is being conducted, or without any request from the IRB for documents or information. It was raised that taxpayers should be given the opportunity to substantiate the computation of additional chargeable income and taxes payable before the formal additional assessment is issued. In its response, the IRB highlighted that Section 91 allows the Director General of Inland Revenue to make such additional assessments to the best of his judgment. The IRB may rely on information obtained from competent third parties, such as the Companies Commission of Malaysia. If a taxpayer does not agree with the assessment, the taxpayer may appeal against the assessment within 30 days.