Improvement of Corporate Tax Audit: Factor of Increasing Tax Compliance in Malaysia

5477 Words Jun 18th, 2012 22 Pages
| Improvement of Corporate Tax Audit: Factor of Increasing Tax Compliance in Malaysia |

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Table of Contents

Executive Summary 3
Introduction………………………………………………………………………………………..4
Tax Compliance, Tax Evasion and Tax Audit…………………………………………………….4
Tax Audit in Malaysia…………………………………………………………………………….6
Organization Structure…………………………………………………………………………….8
Tax Audit Process…………………………………………………………………………………9
Tax Audit: Constraints and Problems……………………………………………………………11
Recommendations………………………………………………………………………………..16
Conclusion……………………………………………………………………………………….18
References……………………………………………………………………………………….19
Appendix………………………………………………………………………………………...20

Executive Summary The Malaysian tax system follows the concept of self-assessment
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The concluding remark of research paper is that in conducting tax audit, the IRBM has internal constraints which are categorized under audit coverage and audit technique. The low of audit coverage and lack of qualified officers are two main factors which affect the level of tax compliance. Through the observation and inquiry on Japanese Tax System, some possible recommendations has been suggested to increase the effectiveness and efficiency of tax audit.

Introduction In the era of Self-Assessment System (SAS), tax audit is a routine activity. The introduction of SAS could increase noncompliance risk because of its voluntary nature, but tax authorities will be able to enhance voluntary compliance through tax audit. Since the introduction of SAS for corporation in 2001, Malaysian tax authority has emphasized tax audit in order to ensure the compliance at optimum level. However, there are still challenges for tax authority to need further improvement i.e. audit coverage is still at lower level (below 5%), human resource development and short term versus long term target/goal dilemma. What is the best audit approach that leads to higher tax-compliance? Tax authorities have internal and external constraints to tackle with. We will look into the current audit approach/practice of the Inland Revenue Board of Malaysia (IRBM) on corporate

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