The IRB had issued a series of new Audit Frameworks for Real Property Gains Tax (“RPGT”), Stamp Duty, Income Tax and Employer.
The key details of the new Audit Frameworks are as below:
| Categories | RPGT | Stamp duty | Income tax (including Labuan), Petroleum Income Tax, Withholding tax, Capital Gains Tax, Employer |
| Audit framework date | 1 January 2025 | 1 January 2025 | 15 March 2025 |
| Audit coverage period | RPGT audit covers disposal within the last 3 years of assessment (“YA”). However, the IRB may raise assessment for up to 5 YAs depending on the audit issues found. This limitation of period does not apply to cases involving fraud and wilful default. | Covers up to 3 calendar years. This limitation of period does not apply to cases involving fraud, evasion and negligence. | Covers up to 3 YAs for Income Tax including Labuan, Withholding Tax (“WHT”) and Capital Gains Tax (“CGT”). Covers up to 2 remuneration years for employer. |
| Audit procedure | The IRB will issue an official request letter for submission of information and supporting documentation. Taxpayer is required to submit such documents accordingly within 14 days. The IRB will notify the taxpayer of its audit findings, if any, and may request the taxpayer to discuss audit findings, where required. If the taxpayer is not satisfied with the audit findings, the taxpayer can formally object within 18 days. Otherwise, the IRB will assume that the taxpayer had agreed to the audit findings. If there are additional tax assessment, the IRB will issue a notice of additional assessment to the taxpayer. Otherwise, the IRB will formally inform the taxpayer via a letter of the completion of audit, without additional tax assessment. | There are two types of reviews i.e. general review and comprehensive review. (1) General review – A notification of audit action letter will be issued. (2) Comprehensive review – An official audit visit letter will be issued. Taxpayer is required to submit the required documents within 14 days. If the taxpayer is not satisfied with the audit findings, the taxpayer can formally object within 14 days. Otherwise, the IRB will assume that the taxpayer had agreed to the audit findings. If there are additional tax assessment, the IRB will issue a notice of additional assessment to the taxpayer. Otherwise, the IRB will formally inform the taxpayer via a letter of the completion of audit, without additional tax assessment. | The IRB will issue an official request letter for submission of information and supporting documentation. Taxpayer is required to submit such documents accordingly within 14 days. It is the taxpayer’s responsibility to submit documents, including those stored abroad. The IRB may disallow the expenditure claim or raise additional assessment if the taxpayer is not able to submit documents. The IRB will notify the taxpayer of its audit findings, if any, and may request the taxpayer to discuss audit findings, where required. If the taxpayer is not satisfied with the audit findings, the taxpayer can formally object within 18 days. Otherwise, the IRB will assume that the taxpayer had agreed to the audit findings. If there are additional tax assessment, the IRB will issue a notice of additional assessment to the taxpayer. Otherwise, the IRB will formally inform the taxpayer via a letter of the completion of audit, without additional tax assessment. |
| Audit timeline | RPGT audit is required to be completed within 90 calendar days, from the date of commencement of the RPGT audit. | (1) General review – 7 working days, from the date of notification of audit action letter and letter requesting for additional information. (2) Comprehensive review – 60 days, from the date of audit visit letter. | (1) Employer audit – 90 days (2) WHT, payor – 90 days (3) WHT, payee – 180 days (4) Finance and insurance industry – 90 to 240 days depending on activity (5) PITA – 240 to 450 days depending on activity |
| Voluntary disclosure | Taxpayers can voluntary disclose at any point of time, as long as the RPGT audit has not commenced. | Taxpayers can voluntary disclose at any point of time, as long as the audit has not commenced. It is only for duty payer on documents stamped through the Stamp Assessment and Payment System (STAMPS). | Taxpayers can voluntary disclose at any point of time, as long as the audit has not commenced. |
| Penalty | Penalty rate at 45% | Penalty rate at 20% of the deficient duty, or RM100, whichever is higher. | (1) Income tax, PITA and CGT – First offence is 15% – Second offence is 30% – Third offence is 45% – Technical adjustment is 0% (2) WHT – 10% penalty rate (3) Labuan – Fine between RM20k to RM1 million or imprisonment of not more than 2 or 3 years, or both. However, offences may be compounded to an amount up to 50% of the maximum fine. (4) Employer – Fine between RM200 to RM20,000 or imprisonment of not more than 6 months, or both. |
| Penalty on voluntary disclosure | Penalty rate at 10% if voluntary disclosure is made in less than 6 months from the submission of RPGT return. Otherwise, a penalty rate of 20% is applicable. | Penalty rate at 10% of the deficient duty, or RM50, whichever is higher. | Penalty rate at 10% if voluntary disclosure is made in less than 6 months from the due date of tax return submission. Otherwise, a penalty rate of 15% is applicable. |
Please refer to the full Audit Framework or reach out to us for further details.
