BACHELOR OF ACCOUNTING (HONS) FACULTY OF BUSINESS AND LAW MULTIMEDIA UNIVERSITY 2010

TAXATION I
SECTION: BM221

LECTURER: MS. YIP YEN YEN

BY:
NO. 1. 2. '. NAME IRENE AU KAR MUN YONG XING NING YEO HWEE CHING STUDENT ID 10 110200! 10 110!'!2 10 110!"#% LIST NO. 1"# 1%1 1%' CONTACT NO. 01 $ !1%2%%& 01" $ 12& 2% 01! $ '1!#&

()*+,-./ 2 Nowadays, Malaysia has successfully changed from a primary-based economy to an industrialized state in 1990s, and has the vision to become a fully-developed country by 2020 !hy Malaysia can have such a huge improvement" #his is definitely because of the ta$es% &irect ta$es, which are administered by the 'nland (evenue )oard *'()+, are the ma,or source of funding which consistently contribute around -0. to /0. of the 0overnment1s total revenue *2asmah 3bdullah,2010 + #a$es have become integral part of a person as well as the country since ta$es are the bul4 of 0overnment1s total revenue !ithout #a$es, development in our country will come to a standstill (evenues that are contributed by ta$ payers enable the government to have the ability in investing substantial sum of money into development 3ccording to the research done by 'nland (evenue )oard *'()+, poverty in Malaysia was reduced from -9 5. in 1960 to / 6., infant mortality rate reduced from /9 per 1,000 in 197/ to 5 / per 1,000 in 2009, literacy rate raise from 66. in 197/ to 9/. in 200/ and a first-class infrastructure networ4 saw the e$pansion of 9,200 4ilometers of road in 197/ to 12-,212 4ilometers in 2009 #his situation shows that Malaysian 0overnment has great plans to change our country from middle-income to a high income nation *2asmah 3bdullah,2010+ 'n order to increase revenues of Malaysian 0overnment, it is obvious that ta$es are the most significant way among other methods which contribute to the increment of 0overnment1s income #here are various types of ta$es that are income ta$es, property ta$es, sales ta$es and other relevant ta$es which play their roles in raising 0overnment1s revenue 'n fact, ta$es are effective methods for capitalizing the public goods1 costs 8ublic goods are usually difficult to reduce in terms of consumption by public for instance street lightning and these costs are paid by 0overnment )ased on research, ta$ revenues have ta4en up to 91. of the overall :ederal 0overnment revenue and due to this scenario, 0overnment has increasingly depending on these revenues or ma4ing them as the primary source of revenue *;unarto, 1999+ 3ccording to the data from the research done, 0overnment has estimated that there still will be ta$ revenue increment although the ta$ rates have

dropped during the last few years <uch estimations are identified only either by strict compliance, ta$ laws or voluntary 2owever, voluntary compliance cannot be conducted individually due to its low sense of reliability #hus, ta$ administrators are re=uired to conduct monitoring strictly Meanwhile, as for the system failures identification, auditors are re=uired to review on the revenue laws and procedures e$isted and their effectiveness !ith this, ta$ administrators can easily differentiate 4inds of controls which discourage and should be eliminated to prevent erosion of ta$ base 3ccording to <ulaiman Mahbob and >a4ariah 3bdul (ashid *n d +, the trend of personal income ta$ which is a part of 0overnment ta$es revenue has not been upward from 1960s to present 3nother source of 0overnment ta$es revenue, corporate ta$ revenue, has also been on downward trend since 2002 2owever, petroleum income ta$ has been increasing and it is compensating for the decline in corporate and personal income ta$es ?$port duties are also declining because of liberation in world trade 3lthough ta$es revenue are declining, ta$es revenue are still the important source of revenue for Malaysian 0overnment because ta$es revenue constitutes very high percentage of total revenue for Malaysian 0overnment #here are convincing reasons why the rates on corporate and personal income ta$es should be lowered and not raised 'ncome ta$ is a strong bloc4 to wor4 and earn more money 'ncome ta$ can dampen initiatives and effort to wor4 and this would constrain economic growth Malaysia1s corporate and personal income ta$ rates are much higher compare to its immediate rivals li4e <ingapore and 2ong ;ong Mohamed 3riff *2009+ mentioned that Malaysia1s personal income ta$ rate of 27 percent is way higher than <ingapore1s 1/ percent or 2ong ;ong1s 16 percent, while its corporate ta$ rate of 2/ per cent is also too high compared to the 16 percent in <ingapore and 2ong ;ong #his is why ta$ rates should be reduced 2owever, the main challenge for Malaysia is how to raise ta$ revenue while reducing the ta$ rates 'n a nutshell, ta$es are the important means of raising revenue for Malaysia 0overnment in many aspects 2ence, we must fulfill our responsibilities by paying our ta$ on time instead of being a ta$ evader as )en,amin :ran4lin *1607-1690+ was saying, @'n this world nothing is certain but death and ta$esA

R*0*1*/2*+ 1) N*3+454*1 2asmah 3bdullah *2010-7-20+ Why citizens should pay their taxes #he <tar Mohamed 3riff *2009-11-25+ Why GST is a must. #he <un 2) E67.2)8*/, ;unarto *1999+ Chapter 15 Malaysia httpBCCwww asosai orgCasosaiDoldC(D8Dgovernment-revenuesCchapterD1/Dmalaysia htm Eoh, & *2009+ Understanding GST. httpBCCwww thenutgraph comCunderstanding-gstC <ulaiman Mahbob, >a4ariah 3bdul (ashid *n d + e!icit "inancing. httpBCCwww mier org myCpresentationsCarchivesCpdfC&r>a4ariah pdf 8iana F *2005+ Tax #e$enue. httpBCCwww economicswebinstitute orgCglossaryCta$rev htm