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2023 Tax Investigation Framework (TIF)
The IRB has issued on its website the updated TIF in Bahasa Malaysia, titled “Rangka Kerja Siasatan Cukai”. This 14-page TIF takes effect from 1 January 2023 and replaces the previous TIF that was effective 1 January 2020 (see Tax Alert No. 1/2020). The updated TIF comprises the following paragraphs:
- Introduction
- Legal provisions
- Investigation activity
- Objectives of the investigation
- Period of the investigation
- Selection of cases
- Investigation procedures
- Rights and responsibilities
- Confidentiality of information
- Offences and penalties
- Closure of cases
- Appeals
- Investigation under Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLATFPUAA)
- Effective date
The contents of the new TIF are broadly similar to those of the earlier framework. It outlines the IRB’s procedures and practices in conducting tax investigations, as well as the rights and responsibilities of the IRB, the taxpayer and the tax agent in a tax investigation.
Some of the key changes are outlined below.
- The 2023 TIF stipulate that the factors taken into consideration in the selection of tax investigation cases include cases where a person intentionally fails to report his income and those making fraudulent claims.
- The following, which were included in the 2020 TIF, have been removed from the 2023 TIF:
(a) Upon completion of the IRB’s investigation, the IRB will issue a letter to the taxpayer confirming the finalization of the investigation. If the settlement is agreed upon, an agreement or letter of undertaking will be signed. The investigation will be considered finalized after the case is approved by the Director General of Inland Revenue, and an assessment will be raised.
(b) The penalties that may be imposed by the IRB under Sections 112(3) and 113(2) of the Income Tax Act 1967 (ITA) in cases where no prosecution has been instituted for taxpayers who fail to furnish return or give notice of chargeability, or furnish incorrect returns.
(c) The procedures and avenues for appeals against an assessment raised by the IRB.
The 2023 TIF is available at the following link: 2023 TIF