Currently, income tax for a year of assessment is levied on income arising in the preceding year. To improve efficiency and responsiveness in tax collections and ensure that the cashflow of the Government reflects the current performance of the economy, the following amendments were proposed in the Budget Speech (absent from the Finance Bill) :

a. income tax be levied on income of the current year from year 2000;

b. tax on income received in 1999 be waived; and

c. losses incurred in 1999 be carried forward to offset against future business income.

It is envisaged that the tax return for year 2000 in respect of income earned in the year 2000 would be submitted in the year 2001. However, the payment of tax for year 2000 income will be on a current year basis.
The current assessment system which requires assessments to be raised after a review of each tax return submitted is labour intensive and costly. In line with recent developments in the Inland Revenue, it is proposed that the self-assessment system be adopted thus placing the onus of filing correct tax returns on the taxpayer.

The change to the self-assessment system is to be implemented in stages as
follows :


Year of Implementation



Businesses, partnerships and cooperatives




With self-assessment, greater emphasis will be placed on field audits rather than the current desk audits.


This report is reproduced with permission from Kassim Chan Tax Services Sdn Bhd (36421-T) and Deloitte Touche Tohmatsu Tax Services Sdn Bhd (151497-P). 7th Floor, 3 Cangkat Raja Chulan 50200 Kuala Lumpur, Malaysia or P.O.Box 11151, 50736 Kuala Lumpur, Malaysia.
Telephone: (603) 232 0711, Facsimile: (603) 2304746, (603) 230 0585

No part of this report may be reproduced in any form without the prior consent of Kassim Chan Tax Services Sdn Bhd and Deloitte Touche Tohmatsu Tax Services Sdn Bhd.

Another Malaysian resource site designed and hosted by MIR Communications Sdn Bhd.