Tax Update: Tax Audit Framework

What is a Tax Audit?

Tax Audit is an investigation into the books of business and financial affairs of a taxpayer to see whether the correct amount of income should be reported and the correct amount of tax should be computed and paid in conformity with tax law and regulations. The two types of audits that IRBM performs audit review, namely desk audit and field audit.

The objective of Tax Audit:

The fundamental goal of a tax audit is to promote voluntary compliance with tax rules and. compliance rate. In this regard, the audit officer is obligated to guarantee that the correct income has been recorded and the appropriate tax has been paid in compliance with the applicable tax laws and regulations.

Sources: INLAND REVENUE BOARD OF MALAYSIA TAX AUDIT FRAMEWORK (Effective Date: 01 May 2022)

The following update of Tax Audit Frameworks has been released by the Inland Revenue Board of Malaysia (IRBM) to help taxpayers understand the most recent tax audit policy, which the IRBM adopted with effect from 1st May 2022 and clarifies, among other things, that no penalty will be imposed on audit findings related to technical adjustments:

1.Tax Audit Framework which replaces the Tax Audit Framework dated 15th December 2019

2.Tax Audit Framework Finance and Insurance which replaces the Tax Audit Framework Finance and Insurance dated 18th November 2020

3. Tax Audit Framework Petroleum, which replaces the Tax Audit Framework Petroleum dated 15th December 2019.