chapter 2 shah 3

8/16/2019 Chapter 2 Shah 3

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Chapter II

2.1 Income Tax

An income tax is a government levy (tax) imposed on individuals or entities

(taxpayers) that varies with the income or profits (taxable income) of the taxpayer. Details

vary widely by jurisdiction. Many jurisdictions refer to income tax on business entities as

companies tax or corporate tax. Partnerships generally are not taxed rather! the partners are

taxed on their share of partnership items. "ax may be imposed by both a country and

subdivisions. Most jurisdictions exempt locally organi#ed charitable organi#ations from tax.

An income tax is a government tax on the taxable profit earned by an individual or

corporation. "he resulting revenue is usually one of the chief sources of cash for a

government entity. $t is considered one of the more fair forms of taxation! since it is only

imposed if a person or business has been successful enough to generate taxable income. "hus!

its impact on the poor or unprofitable is minor to non%existent. Most tax rates are progressive!

which means that the tax rate increases as the level of income increases. "he reasoning

behind this tax structure is that the poor are less able to pay taxes! while the rich have more

excess cash with which to pay taxes. "he amount of income tax paid can be reduced by a

number of deductions! which are allowed as the result of legislation by the relevant

government entity. "hese deductions are usually intended to foster certain types of behaviour

by taxpayers http&''www.accountingtools.com'definition%income%tax. $ncome tax generally is

computed as the product of a tax rate times taxable income. "he tax rate may increase as

taxable income increases (referred to as graduated rates). "ax rates may vary by type or

characteristics of the taxpayer. apital gains may be taxed at different rates than other

income. redits of various sorts may be allowed that reduce tax. ome jurisdictions impose

the higher of an income tax or a tax on an alternative base or measure of income.

"axable income of taxpayers resident in the jurisdiction is generally total income less

income producing expenses and other deductions. *enerally! only net gain from sale of

property! including goods held for sale! is included in income. $ncome of a corporation+s

shareholders usually includes distributions of profits from the corporation. Deductions

typically include all income producing or business expenses including an allowance for

recovery of costs of business assets. Many jurisdictions allow notional deductions for

individuals! and may allow deduction of some personal expenses. Most jurisdictions either do

not tax income earned outside the jurisdiction or allow a credit for taxes paid to other

jurisdictions on such income. ,on residents are taxed only on certain types of income from

sources within the jurisdictions! with few exceptions. Most jurisdictions re-uire self%

assessment of the tax and re-uire payers of some types of income to withhold tax from those

payments. Advance payments of tax by taxpayers may be re-uired. "axpayers not timely

paying tax owed are generally subject to significant penalties! which may include jail for

https://en.wikipedia.org/wiki/Corporate_taxhttps://en.wikipedia.org/wiki/Charitieshttps://en.wikipedia.org/wiki/Charitieshttps://en.wikipedia.org/wiki/Tax_ratehttps://en.wikipedia.org/wiki/Tax_ratehttps://en.wikipedia.org/wiki/Charitieshttps://en.wikipedia.org/wiki/Tax_ratehttps://en.wikipedia.org/wiki/Corporate_tax


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individuals or revocation of an entity+s legal existence http&''legal%

dictionary.thefreedictionary.com'incometax.

2.2 Income Tax in Malaysia

Malaysia/s taxes are assessed on a current year basis and are under the self%

assessment system for all taxpayers. Malaysia+s taxation system is territorial in scope. All

income accrued in! derived from or remitted to Malaysia is liable to tax. 0owever! income of

any person (other than a resident company carrying on the business of ban1ing! insurance or

sea or air transport) derived from sources outside Malaysia and received in Malaysia is

exempted from tax.

"able 2.3"ypes of taxes in Malaysia

Direct taxes $ndirect taxes

$ncome tax 4xcise duty5eal property gains tax $mport and export dutyPetroleum income tax tamp duty

6thers *oods and services tax6thers

"able 2.2Malaysia tax rate.

$ncome tax rate 27 8orporate tax rate 29 8ales tax ' service rate 9 8 : 3; 8

"he income tax! with the highest rate only recently being at 2


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>Malaysia My econd 0ome Programme? are not re-uired to pay tax on their pension or

income remitted from abroad. Apart from this! all income achieved in or derived to Malaysia

is reliable to tax. Malaysia has an Agreement for the Avoidance of Double "axation for

several countries. @or further details go the the website of the Malaysian $nland 5evenue

oard.

2.2.1 Calculation of income tax and tax deduction

"he income tax of non%residents is calculated on a three%step tax rate! 2=8! 398 and

3;8! depending on the type of income. "he income tax rate for residents is calculated on the

amount of income and is much more precise. "he income is classified into < different tax

groups ranging from ;8 to 278. "ax deductions in Malaysia are available in numerous cases!

including medical expenses! purchase of boo1s! computers and sport e-uipment or education

fees. "he $nland 5evenue oard of Malaysia! which is the country+s responsible institute for

taxation! provides very clearly represented and detailed information on all tax issues. "here

you will find a list on tax deduction cases! the income tax scale for residents and for non%

residents.

2.2.2 Income tax declaration

All tax residents who are subject to taxation must file a Malaysian tax return. "he

submission deadline is the B;th of April for the preceding tax year. "his deadline cannot be

extended. A tax year e-uals a calendar year. Cou will receive an $ncome "ax 5eturn @ormfrom the $nland 5evenue oard of Malaysia. 5esidents! according to Malaysian tax law! have

to fill in a 4 @orm! non%residents an M @orm. Cou have to fill the respective forms

completely and to return them within B; days to an $5M ($nland 5evenue oard of

Malaysia) office. After your declaration has been processed! your credit in the account will be

refunded to you automatically.

2.2.3 Other taxes

$nstead of .A.". there are two other types of consumption taxes! namely service taxand sales tax. $t is planned to introduce a combined *oods and ervices "ax (*") but this

step has been currently put on hold. "he sales tax has B rates! 98! 3;8 and 398! with 98

applying to non%essential foodstuffs and buliding materials and 398 to cigarettes and alcohol.

asic foodstuffs! basic buliding materials! boo1s and certain tourist and sports goods are

exempted.

ervice tax is imposed in Malaysia on certain services and goods! li1e food and drin1s! which

is provided in establishments li1e restaurants and hotels. $t is currently fixed at 98.

http://www.hasil.gov.my/http://www.hasil.gov.my/http://www.hasil.gov.my/goindex.php?kump=2&skum=6&posi=1&unit=5&sequ=1http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=5000&sequ=11http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=1&sequ=1http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=1&sequ=1http://www.hasil.gov.my/http://www.hasil.gov.my/http://www.hasil.gov.my/goindex.php?kump=2&skum=6&posi=1&unit=5&sequ=1http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=5000&sequ=11http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=1&sequ=1http://www.hasil.gov.my/goindex.php?kump=5&skum=1&posi=2&unit=1&sequ=1


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http&''www.1eha1iman.gov.my'sites'default'files'userB'"he82;Asean82;"ax82;ystem

82;ang1o182;"hailand.pdf

file&'''&'Esers'hahiddah82;Arrashid'Downloads'imran82;ptj'2;37%malaysian%tax%

business%boo1let.pdf

2.3 Malaysia Tax System

2.3.1 e-Filin

e#0Ail e%@iling is a most convenient way to submit $ncome "ax 5eturn @orm ($"5@). $t

also saves a lot of time and very easy to complete it online rather than conventional methods

by manually filling up the form because all the calculation is automatic. "axpayers are

encouraged to complete their $ncome "ax 5eturn @rom ($"5@) via e%@iling. $t is very

convenience! save time and easy to complete it online rather than conventional methods by

manually filling up the form. @or a new taxpayer or existing taxpayer who would li1e to

complete $"5@ for the first time! there are a few steps you have to complete prior to filling

the $"5@ form online through e%@iling. People just need to enter their income! deduction!

relief and rebate only. "he most important thing is they will get a faster refund in case they

paid excess income tax through Potongan Cukai Bulanan (P). Also! F0D, extended the

dateline for extra 2 wee1s. @ig. 2.2 shows overview of e%filing in Malaysia. "he e%filing

developed following from the need to improve efficiency both for the legal community and

also the judiciary. "he benefits of e%filing are as follows &

• oncurrent access to case documents (2G hours! = days a wee1).

• $nteractive alerts! notifications and e%mails.

•

ost%effective storage of files in digital format.• 6ptions of submitting from anywhere (no more -ueues).

• Achieve greater automation and end%to%end computerisation of court processes.

• $mprove efficiency in management and administration of court related matters.

• 4liminate incidences of missing files.

• Allows counsel to file court document from anywhere without -ueuing.

e%filig systems increase the -uality and -uantity of information available to tax

officers! enabling them to complete transactions faster and more accurately.

http://www.kehakiman.gov.my/sites/default/files/user3/The%20Asean%20Tax%20System%20Bangkok%20Thailand.pdfhttp://www.kehakiman.gov.my/sites/default/files/user3/The%20Asean%20Tax%20System%20Bangkok%20Thailand.pdfhttps://ez.hasil.gov.my/http://www.kehakiman.gov.my/sites/default/files/user3/The%20Asean%20Tax%20System%20Bangkok%20Thailand.pdfhttp://www.kehakiman.gov.my/sites/default/files/user3/The%20Asean%20Tax%20System%20Bangkok%20Thailand.pdfhttps://ez.hasil.gov.my/


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@igure 2.3 6verview of e%filing in Malaysia


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3.http&''www.hasil.gov.my'pdf'pdfam'pesifi1asiHIaedahHPengiraanHer1omputerHPH2;37.pdf 2.http&''www.hasil.gov.my'btHgoindex.phpJ

btH1umpK9LbtHs1umK9LbtHposiKBLbtHunitK3LbtHse-uK2B. http&''www.hasil.gov.my'pdf'pdfam'B7G9.pdf

2.! Mo"ile de#ices

Mobile devices have come a long way over the past few years. Mobile devices are

being used extensively and serve many purpose. "he iPhone was first released to consumers

in une 2;;=. 4ver since the first release! the devices has increasingly gained in popularity!

partly due to its advanced functionality and usability. https&''boo1s.google.com.my'boo1sJ

hlKenLlrKLidKDN#b


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the overall mar1et. 0aving finali#ed its ac-uisition of ,o1ia in the spring of 2;3G! Microsoft

relied primarily on a long list of entry%level Fumia devices to maintain its position in the

mar1et! and relied on its partners 0" and amsung to provide cover on the high%end of the

mar1et. ith the launch of indows 3; later this year! indows Phone stands to ma1e a

more concerted effort to return to the high end of the mar1et. lac1erry posted the only

year%over%year decline among the leading operating systems! falling %7S.


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@inally! i6 G.; saw the introduction of multitas1ing! though in practice it as1s more li1e app

switching http&''sB.ama#onaws.com'academia.edu.documents'B3;;G;;G'2;;


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percent going to Apple http&''www.technobuffalo.com'2;33';2'3S'introduction%to%ios%

development%understanding%your%platform' .

@ig. 2.2 iPhone models

http://www.technobuffalo.com/2011/02/19/introduction-to-ios-development-understanding-your-platform/http://www.technobuffalo.com/2011/02/19/introduction-to-ios-development-understanding-your-platform/http://www.technobuffalo.com/2011/02/19/introduction-to-ios-development-understanding-your-platform/http://www.technobuffalo.com/2011/02/19/introduction-to-ios-development-understanding-your-platform/http://www.technobuffalo.com/2011/02/19/introduction-to-ios-development-understanding-your-platform/


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"able 2.B"op four smartphone operating system! unit shipments! mar1et share and year over year growth in 2;3G (units in millions)

6perating ystem 2;3G Enit olumes 2;3G Mar1et hare 2;3B Enit olumes 2;3B Mar1et hare Cear 6ver Cear hange

Android 3 ;9S.B


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2.$ Income Tax Calculator

Ender the present income tax regulations many millions of persons will file income

tax returns! and the number will probably be increased in subse-uent years. "he number of

man%hours expended in preparing and. chec1ing these returns! if calculated! would be!

indeed! astounding. At present! there has been made available three types of returns that an

individual may file. "hese various forms are provided in an effort to reduce the amount of

time consumed in preparing and chec1ing income tax returns! and also to ma1e available to

certain classes of people a simplified form on which they may file their income tax returns.

"he number of income tax returns handled by such tax experts will ordinarily be

appreciable and any saving in the amount of time consumed in preparing a return will be

beneficial. A great deal of time is also consumed in chec1ing the mathematical computations present in these returns after they are filed and any simplification of this chec1ing process is

most beneficial. Accordingly! the principal object of my invention is to provide a tax

calculator that -uic1ly! easily! and accurately calculates the amount of income tax from the

net taxable income. Another object is to provide a calculator wherein from a single setting

both the tentative tax B and combined normal tax and surtax may be obtained. Another object

is to provide a tax calculator that is of a convenient si#e and which will calculate income

taxes over a wide range of net taxable income values. A further object is to provide a tax

calculator which prevents mista1es brought about by the association of inappropriate scales.

A still further object is to provide a tax calculator that is dependable and accurate to withinone cent.

5eferences ited in the file of this patent E,$"4D "A"4 PA"4," ,umber ,ame Date

5e. 3;!9S2 hild May 9! 32.% Income Tax Mo"ile &pps

A mobile app is a computer program designed to run on mobile devices such as

smartphones and tablet computers. Most such devices are sold with several apps bundled as

pre%installed software! such as a web browser! email client! calendar! mapping program! and

an app for buying music or other media or more apps. $n 2;3B! the global mobile app mar1et

was estimated at over EW9; billion and is expected to grow to W39; billion in the next two


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years. According to *hose Anindya L 0an ang Pil! they build a structural econometric

model to -uantify the vibrant platform competition between mobile (smartphone and tablet)

apps on the Apple i6 and *oogle Android platforms and estimate consumer preferences

toward different mobile app characteristics. "hey found that the app demand increases with

the in%app purchase option wherein a user can complete transactions within the app. 6n the

contrary! app demand decreases with the in%app advertisement option where consumers are

shown ads while they are engaging with the app. "he direct effects on app revenue from the

inclusion of an in%app purchase option and an in%app advertisement option are e-uivalent to

offering a 2


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several tax%payers who don/t declare everything they have spent hence the whole concept of

filing tax returns is itself flawed. "a1ing hardcopies of tax returns! and then snail%mailing

them was another grudge shared by social media users. $n $ndia! only 2.


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http&''www.straitstimes.com'business'economy'filing%your%income%tax%by%mobile%phone%

among%new%measures%announced%by%iras

2.%.1 I'S2(o

$n 2;33! the $5 launched $52*o! its official mobile app designed to provide

taxpayers with a convenient self%service income tax return tool. 6ver the years! it/s been

updated for a streamlined user experience that provides more information and utility than

previous versions.

"able 2.G

$nformation $52*o Mobile AppI'S2(o Mo"ile &pp

ost to download @reehere available Ama#on! i"unes App tore and *oogle PlayDownloads %$nfo not available for Ama#on

%$nfo not available for i"unes App tore

%3; ;;; to 9; ;;; in *oogle PlayAma#on rating G out of 9 starsi"unes App tore rating B.9 out of 9 stars*oogle Play rating G.3 out of 9 stars


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@igure 2.B "he mobile $52*o appshttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uEHgEhttps://www.irs.go!/uac/"$%&o'pphttp://www.goban(ingrates.com/personal-)nance/irs%go-mobile-app-re!iew-simple-tax-refund-trac(ing/

2.%.2 My)loc*

"he Myloc1 mobile app designed to provide chec1 refund status and browse a

notable help section that/s full of terms and answers to basic tax -uestions. "he app also

features a chec1list that helps create a tax filing to%do list! along with tools that allows plan

paychec1 in advance and estimate the extent of refund. @urthermore! it can chec1 the status of

@ederal refund and even access prior year/s tax returns to compare if need be. "he app also

has a handy chec1list feature that ma1es sure that people don/t miss any crucial step along the

way! and there/s even a glossary of hundreds of tax terms that they can access -uic1ly and

easily.

http://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uEHgjEhttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uEHgjEhttps://www.irs.gov/uac/IRS2GoApphttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uEHgjEhttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uEHgjEhttps://www.irs.gov/uac/IRS2GoApp


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http://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-

iphone/#ixzz487u!*tn(

http://www.gottabemobile.com/2015/01/16/5-iphone-apps-to-simplify-tax-season-in-2015/

@igure 2.G "he mobile My loc1 apps

2.%.3 +xpensify

4xpensify is a mobile application that aims to ma1e expense reporting easy. ith the

app! users can snap pictures of receipts! trac1 spending! and create and submit expense

reports : all from their iPhones! iPads or Android devices. 4xpensify is a mobile apps that

help independent contractors or anyone else loo1ing to further cement their deductible

expenditures throughout the year. "he straight forward mobile app allows to capture receipts!

trac1 time or mileage! and generally ma1e note of any expenses or attachments that have

laying around.

Esing 4xpensify! user can add receipts! trac1 time or mileage! and create

http://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uvBtnkhttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uvBtnkhttp://www.digitaltrends.com/mobile/http://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uvBtnkhttp://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487uvBtnkhttp://www.digitaltrends.com/mobile/


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expense reports -uic1ly and easily. "he app even has a nifty camera function that can use to

ta1e photos of receipts so that user can store them right in the app. $t can also automatically

import credit card transactions and scan receipts to create expense reports X if desired X

both of which can later convert into $5%approved e5eceipts that minimi#e user paper

footprint! and! more importantly! any tax%related discrepancies.

http://www.digitaltrends.com/mobile/best-income-tax-apps-for-android-iphone/#ixzz487w+Hn4,

http://www.gottabemobile.com/2015/01/16/5-iphone-apps-to-simplify-tax-season-in-2015/

https://www.asicentral.com/news/web-exclusive/april-2016/tech-edge-the-expensify-app/

@igure 2.9 "he mobile 4xpensify apps2.%.! My Tax India

My "ax $ndia is mobile app that instantly calculates user tax! tax splits! and can

suggest how much more investment is needed to save a given amount from user income. Eser

can also monitor and trac1 user savings through graphs.

http&''www.businesstoday.in'maga#ine'bt%more'products'smartphone%apps%that%help%in%

calculating%tax'story'3SG3B


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@igure 2.7 "he mobile My "ax $ndia apps

2.%.$ ,M'C

"he 0M5 "ax calculator app allows user to wor1 out how much tax they pay and

how the government spends it. "he app was introduced in pring 2;32 and is periodically

updated with new features. "he 0M5 "ax alculator can be downloaded for free from

Apple/s App store or from *oogle Play. $t is also available online (as a browser version). "his

mobile apps can help small businesses with record 1eeping on the go! the commercial


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software industry! following consultation with 0M 5evenue L ustoms (0M5)! are

producing simple record 1eeping mobile applications for businesses below the A" threshold.

$n 2;39! 0M5 have launched a new mobile application available now on Apple and

Android devices! which may be of interest to ervice leavers who are considering business

start%up or becoming self%employed. "he new app for businesses provides easier access to a

wide range of 0M5+s digital help and support. "he app lin1s to services which provide the

right advice in helping businesses with their tax obligations. "he new free app! part of our

continuing commitment to ma1e tax easier! -uic1er and simpler for business! allows access to

the following via your tablet or mobile device&

• usiness live webinars and recorded videos

• usiness e%learning

• igning up to our email alerts

• 0M5 usiness 0elp "witter account

• ommercially developed 5ecord Ieeping apps

https&''www.gov.u1'government'news'mobile%apps

https&''www.ctp.org.u1'focus'tips%and%advice%hmrc%launch%new%business'G7BB2S

https://www.gov.uk/government/news/mobile-appshttps://www.gov.uk/government/news/mobile-apps


20/21

@igure 2.= "he mobile 0M5 apps

5eferences&

http&''eyefodder.com'2;33';7'-uality%software%non%functional%re-uirements.htmlQsthash.;v90d$g.dpuf https&''sachinsdate.wordpress.com'2;3B';G'2='non%functional%re-uirements%in%mobile%applications'http&''users.csc.calpoly.edu'Ujdalbey'4'OA'nonfunctional.htmlhttp&''searchsoftware-uality.techtarget.com'definition'systems%development%life%cyclehttps&''efiling.1eha1iman.gov.my'e@iling'Q

https&''e1ls.hasil.

https&''www.govtrac1.us'congress'bills'332'hr3


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http&''www.gsma.com'publicpolicy'wp%content'uploads'2;3G';2'Mobile%taxes%and%fees%A%tool1it%of%principles%and%evidenceHfullreport%@$,AF3.pdf

https&''savemoney.my'personal%finance'malaysia%income%tax%guide%2;39'

https&''en.santandertrade.com'establish%overseas'malaysia'tax%system

http&''heinonline.org'06F'PageJhandleKhein.journals'denlrB;LdivK2GLgHsentK3LcollectionKjournals

http&''www.lifesciencesite.com'lsj'life33;='3;BH29;73life33;=3GH=33H=39.pdf

http&''www.irbrp.com'static'documents'6ctober%,ovember'2;;

chapter 2 shah 3

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