Purposes of Tax Registration
In almost every country of the world, tax registration is required by law. Tax registration is important because it enables the government of a country to keep track of everyone who is required to pay tax to the tax authorities of the country in question. It thus enables the government to be better equipped to handle any tax crimes which may have been committed as well as understand where a significant portion of its tax revenue originates.
Tax Registration in Malaysia
Tax registration in Malaysia begins with an action taken by the Inland Revenue Board of Malaysia (LHDN). The LHDN first assigns a unique number to all people who have been registered for tax purposes. This unique number is known as “Nombor Cukai Pendapatan”, which is a Malaysian taxpayer’s income tax number. This number is issued to anyone who is required to report the income which has been earned over the duration of the tax year for assessment to the Director General of Inland Revenue. Each number is unique and generated according to the nature and identity of the taxpayer. For example, the income tax number of an individual will be different from that of a company. However, the same number will be used for different taxes which are managed by the LHDN in the same way. A taxpayer who intends to register for an income tax number may do so by filling out forms online or on a printed registration form. Those who choose to use a printed form may print out the registration form from the LHDN’s website. Printed registration forms are also available at any of the LHDN’s branches located which are throughout Malaysia. However, taxpayers are encouraged to use the online method of tax registration because of its relative simplicity and speed of completion.
How a Taxpayer in Malaysia Registers for Tax
To register for tax as a taxpayer in Malaysia, certain procedures are to be followed. The first of these is the actual act of registering. Those who are to be taxed for the first time must register an income tax reference number before proceeding. Once this is done, the taxpayer is to register at either an LHDN branch or online. When registering for tax, the taxpayer is to supply copies of the following documents: the taxpayer’s latest salary statement or pay slip; the taxpayer’s identification card (IC), police IC, army IC, or international passport; and the taxpayer’s marriage certificate, should one exist. Those who are applying for e-Filing for the first time must also apply for a personal identification number (PIN) number at an LHDN branch. A PIN is required by those who are logging in for the first time.
Required Documents for the Filing of Taxes
Those who are to file their taxes must ensure that they have ample access to certain documents. These include a reference number, an income statement, an Employees’ Provident Fund (EPF) statement, and any receipts which would allow the taxpayer to claim any reliefs, rebates, or exemptions.
Forms to Be Used by Taxpayers in Malaysia
Every taxpayer in Malaysia must use one of several forms for the payment of taxes. The form to be used depends on the taxpayer’s source of income as well as the taxpayer’s status or lack thereof as a tax resident. Employed resident individuals are to use Form e-BE/BE. Resident individuals who own and run a business must use Form e-B/B. Resident individuals who are knowledge workers are required to use Form e-BT/BT. Non-resident individuals who are either employed or own and run a business in Malaysia must use Form e-M/M. Non-resident individuals who are knowledge workers are to use Form e-MT/MT.
What Must Be Done After Completion of Tax Registration
Once the tax registration has been completed, an income tax reference number will be provided to the taxpayer within three working days. The taxpayer must then log into the tax account and pay the tax amount required before the due date. The amount of tax to be paid will be automatically calculated when the taxpayer specifies the income details. Taxpayers who have inadvertently paid more than the amount required of them will recoup this amount during the filing of taxes.
There is much information to be understood with regard to taxation in Malaysia. Some may not truly understand everything which they must know about Malaysia’s tax system. Perhaps this applies to you as well. Fortunately for you, if it does, we at Paul Hype Page & Co are able to assist you. Our knowledgeable and skilled tax experts will keep you informed about all the latest tax-related developments in Malaysia. If you need any help with your tax filing, we can also provide any form of assistance which you might need.
The Role of the LHDN in Tax Registration in Malaysia
The primary government authority which oversees tax registration in Malaysia is the LHDN. The LHDN was created on March 1, 1996. Today, the LHDN is Malaysia’s primary agency responsible for the collecting of revenue for the Ministry of Finance (MOF). The MOF, is the governing body which is responsible for the management of all of the Malaysian government’s expenditure and revenue. The MOF is also responsible for the development of the country’s economic policies as well as the preparation of the annual federal budget of Malaysia.
According to the Inland Revenue Board of Malaysia Act 1995, the LHDN is an agency which was established in such a way so as to have a significant amount of financial autonomy. One of LHDN’s primary responsibilities in this regard is the improvement of the quality and effectiveness of tax administration in Malaysia. Therefore, the LHDN’s main roles and responsibilities can be summarized as those which are related to the general administration of direct taxes in Malaysia. There are six government acts which guide the actions of the LHDN; these are the Petroleum (Income Tax) Act 1967, the Real Property Gains Tax Act 1976, the Income Tax Act 1967, the Promotion of Investments Act 1986, the Labuan Offshore Business Activity Tax Act of 1990, and the Stamp Act of 1949. Each of these acts plays an important role with regard to the formation of the tax system of Malaysia today.
The LHDN also has several other secondary duties which it is tasked with performing. One of these relates to the LHDN’s role as a government agent. The LHDN is obligated to perform certain tax-related services which include administration, assessment, enforcement, and collection with regard to the payment of taxes. The taxes which are to be collected by the LHDN include real property gains tax, income tax, stamp duties, petroleum income tax, estate duties, and any other taxes which may apply at any given time. The LHDN is the official representative of the Malaysian government with regard to any matter regarding taxation; such is the case whether LHDN or government authorities happen to be inside or outside Malaysia. The LHDN is also required to serve as an advisory body to the government with regard to any matters which are related to taxation. The LHDN is also to liaise with certain ministries and statutory bodies as well as perform any other functions which are required of it by any other written law. It is also required to act as a collection agent for and on behalf of any entity involved with the recovery of any loans which must be repaid.
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IRB (Inland Revenue Board) governs Malaysia’s tax system, helps develop a stronger economy, better environment and a more vibrant economy. All companies, regardless of industry, have a legal duty to pay taxes.
Malaysia attracts investments from around the world by reducing its corporate income tax rate and introducing different tax incentives. Malaysia has one of the lowest corporate tax rates in the world.
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