Tax Audit

Under the Silf Assessment System, tax audit is a primary activity of the Inland Revenue Board of malaysia. It aims to enhance voluntary compliance with the tax laws and regulations. A taxpayer selected for an audit does not necessarily mean that the taxpayer has committed an offence.

What is a tax audit?
A tax audit is an examination of a taxpayer's business records and financial affairs to ascertain that the amount of tax reported and paid are in accordance iht tax laws and regularations. The IRB carries out two (2) tyoes of audit, namely desk audit and field audit.

Desk audit
a. A desk audit is carried out at the IRB's office. Desk audits are normally concerned with straight forward issues or tax adjustments which are easily dealt with via correspondence. A taxpayer may be called for an interview at IRB's office if any additional information is required.

b. It involves checking all information on income and expenses as well as various types of claims mae by a taxpayer in his income tax return.

c. Specific desk audit cases can be referred for field audit action where the taxpayer will be informed through a field audit notification letter as part of the normal process of commencing the field audit.

Field Audit
A field audit is one that takes place at a taxpayer's premise. It involves the examination of the taxpayer's business records. In the case of a sole-proprietorship or partnership, if the taxpayer's business records are imcomplete it may involve the examination of non-business records such as [ersonal bank statements, etc. A taxpayer will be given notice prior to a field audit.

Objective of Tax Audit
The main objective of tax audit is to encourage voluntary compliance with the tax laws abd regulations and to ensure that a higher tax compliance rate is acheved under the Self Assessment System. In this regard, the audit officer is required to ensure that the correct amount of income is reported and the right amount of tax is paid in accordance with the tax laws and regulations.