For the past few decades Malaysia has operated a traditional tax assessment system where the tax authority, Inland Revenue Board (IRB) assesses the tax liability of individuals and companies and requires them to pay accordingly. However effective from year 2001, Malaysia has migrated to a self-assessment system (SAS); a system that has been used by Australia and United States. The first phase for SAS, for year assessment 2001 was introduced to Malaysian Companies While individuals taxation using SAS starts in year assessment 2004.
 
Under the SAS, companies will have to assess their business taxation themselves, as apposed to sending it to the IRB to have it done by professional. Hence more liability and responsibility is placed on the business entity.
 
This research seeks to determine the expectation gap between Malaysia Companies, specifically Small – Medium Industries (SMI) and the Island Revenue Board specifically relating to SAS since it is the default tax system. The sample of SMIs chosen as firstly, these companies rarely have the budget nor the personnel to ensure they are always kept abreast of changes in the country’s taxation system. Secondly, SMIs form a very important part of developing economy. As of 31th Dec 2003, there are almost 83000 registered SMIs in Malaysia covering both service and manufacturing enterprises.
 
The research design was includes variable such as general level of awareness, readiness, acceptability and demography. The data for this study was collected via questionnaire distribution.
 
This study is also an evaluation of the efforts done by the IRB as the premier governing taxation body and how it synchronizes the SAS objective and implementation efforts with SMIs in Malaysia. This research would be valuable in determining an effective and efficient method of tax planning with the end user in mind.

Research Team:
•  Annie Diana Hariharan

Institute:
MMU