New STD rules - News Report

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Wednesday December 24, 2008

New IRB move to avoid over-deduction



KUALA LUMPUR: A new schedular tax deduction (STD) system will take effect from Jan 1 to overcome the problem of over-deduction.

This means employers and employees will have to do more - they now have to file tax exemptions on a monthly basis rather than annually.

Inland Revenue Board chief executive officer Datuk Hasmah Abdullah said the new system would ensure that an accurate amount was deducted, and would reduce the instances of over-payments and refunds or under-payment involving three million people.

Details of the new system, such as the calculation of STD, would be posted on the IRB website when it is gazetted.

“The new STD system will require employees to provide to their employers the monthly exemptions, personal relief and rebates they wish to claim as a taxpayer,” said Hasmah.

Some of the exemptions include life insurance payments, medical expenses for parents, equipment for the disabled, higher education fees, full medical examination, purchase of books, magazines, journals and computer and alimony payments.

The rebates can include zakat payments and levies for visit pass, education pass and worker permit pass.

“We will continue to give talks to employers in big groups on the new system and they will be given time to convert their systems to cope with the new STD system.”

However, the first monthly payment for the January salary would have to be made by Feb 10.

The appropriate forms for employees to submit to their employer will be released as soon as the STD is gazetted.

The completed forms will have to be forwarded to the employer to collate and consolidate before forwarding the information electronically to IRB using Form CP39 declaring all the STD deductions.

The Malaysian Employers Federation (MEF) has objected to the new system, saying that it would burden employers.

“It is going to be costly and create a lot of problems as we have to employ more people and create a new software to process the STD deductions monthly,” said MEF executive director Shamsuddin Bardan.



IRB: No need to file monthly tax exemption




The new schedular tax deduction (STD)system will be flexible for employers and they would not have to file tax exemptions every month, said the Chief Executive Officer of the Inland Revenue Board, Datuk Hasmah Abdullah.

She said employers could work out a policy where the filing of tax exemptions could be done at a specific period such as like in the last two months and not necessarily every month in line with the introduction of new tax allowances.

Hasmah said in view of the new tax allowances given under the 2009 Budget, the IRB has to look at new STD system to avoid over deductions.

“The government has announced exemptions on several allowances such as petrol allowances and so on, and this needs to be taken into account under the STD.

“Since there is no fixed amount among all employers, we allow them to be flexible about this,” Hasmah told reporters here today.
Some of the exemptions announced include allowances or child care subsidy for children aged up to six years limited to RM2,400 per year, petrol cards, and travel allowances.

It was reported today that the IRB will be introducing a new STD system effective January 1, once it is gazetted, and that employers would have to file tax exemptions monthly rather than once a year.

Meanwhile, Hasmah said the e-Stamping which will take off January 1, in place of stamp duty, will be implemented in stages starting with the property ownership transfer assessment system.

For other documents, e-Stamping will be implemented the latest by June next year and meanwhile special receipts will be used, she said.

“e-Stamping will be implemented in all 34 IRB Stamp Offices and 13 Revenue Services Centre nationwide.” The regional offices will however continue to use the previous method, she said.

In line with e-Stamping, the stamps created by using the franking machine at the IRB and the official receipt will not be used effective January next year.

In place, a special receipt will be issued by the Stamp Office via computer and this would have to be attached to letters or documents as proof of stamping.


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