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The Main Differences Between Tax Audit And Tax Investigation In Malaysia.

1152 words - 5 pages

Tax Investigation must be clearly separate from Tax Audit. Tax Investigation is an inspection of the tax payer’s business or individual books, records or document in order to ensure the tax payer had reported the correct amount of income and tax that need to pay in accordance with tax laws and provisions. Tax investigation will be carried on by surprise which also known as back duty case. It was conducted on behalf of owner and outsiders like investors. When there is suspected based on detailed and clear evidence that show that the taxpayer has the intention to avoid paying the tax which also known as tax evasion. The tax investigator will arrive at the tax payer’s premises and take the custody of the required documents, books and records for investigation purposes. Besides that, additional notice may be served if required. It also will request the taxpayers, creditors and the bankers of the taxpayer to obtain some additional information in the purpose to invent the best judgment of the tax affairs of the taxpayer. If there is necessary, tax investigator will require an interview with the taxpayer for further information. The tax investigation can be classified in two categories which is civil tax investigation and criminal tax investigation. Civil tax investigation involves the activity of detection of tax evasion. This will lead to the tax payers have the responsibility to recover the tax loss and coupled with heavy penalties. Criminal tax investigations focus on gathering some acceptable evidence that prosecute and belief that the tax evader is offences to the law. The purpose of Tax investigation is varies from business to business. It ensures the correct amounts of tax are collected and determine the person responsible for the offence and follow the criminal prosecution.Tax audit is an inspection of a taxpayer’s business records and financial affairs to ensure that the amount of tax that reported and paid are according with tax laws and regulations. Unlike tax investigation, tax audit are not conducted surprisingly, it is conducted on behalf of the owners only and the appointment will made by them. The taxpayers are advice of the date and estimate of the duration of the audit. The scope of audit will also be defined in order to let the taxpayer prepare the document which required. Tax audit can be classified into 2 categories which are desk audit and field audit. Desk audit is conventional way of tax audit which involves in reviewing of the information or document on income and expenses as well as several types of claims made by a taxpayer in his income tax return. The taxpayer will obtained the information through correspondences or interview if it is require at the IRB’s offices. Field audit is the most common way of tax audit under self assessment system. Field audit take places in the taxpayer’s premises for a detailed review of all relevant documents. The selection of taxpayers for a field audit is based on some...

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