Self-assessment system in Malaysia

At the time of the Malaysian government’s ‘Look East’ policy in the 1980s, ¹ there were calls for the introduction of a self-assessment (SA) system of taxation modelled on that of Japan. ² These calls were aimed at enabling the Malaysian Inland Revenue Department ³ to deploy its staff to more productive functions; and to encourage taxpayers to have a better understanding and knowledge of their tax affairs. ⁴ It was not until 2000 that the Malaysian government introduced a SA system to replace (in stages) the existing official assessment system. ⁵ The implementation of SA commenced with companies in 2001, followed by sole proprietorship businesses, partnerships and cooperatives in 2003 and salaried individuals in 2004. To streamline the implementation of the SA system for taxpayers (other than companies) a bill was introduced and passed, ⁶ and came into effect on 1 January 2004.