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A Survey on Small Medium Enterprises (SMEs) and Taxation (as of 03/08/2009)
Section A: Background Information
A1. What is your position in the company?
SMEs owner/proprietor (please proceed to A2)
Manager/administrator/company secretary that work in SMEs (please proceed to A2)
Accountant/account officer/book keeper that work in SMEs (please proceed to A2)
Tax practitioner/tax agent (thank you, please return the questionnaire)
None of the above (thank you, please return the questionnaire)
A2. Do you handle tax affairs of SMEs?
Yes No (please return the questionnaire)
A3. Number of working experience related to taxation of SMEs?
1-2 years 3-4 years 5-6 years 7-8 years 9-10 years > 10 years
A4. You are: Male Female
A5. What is your age?
< 21 21-30 31-40 41-50 51-60 > 61
A6. Are you a member of Malaysian Institute of Accountants? Yes No
Section B: SMEs and Taxation
B1. Which of the following best describe the type of business?
Manufacturing Trading Service Transport & storage
Agriculture, forestry & fishing Construction Hotels & restaurants
Others (please state:__________________)
B2. How long has your business been in operating in Malaysia?
1-2 years 3-4 years 5-6 years 7-8 years 9-10 years
> 10 years
B3. Where is your business located? Please state the State (KL, Kedah, Penang, …):
_________________
B4. Would you consider your office to be situated in an:
Urban area Rural area Suburb area
A Joint Research of Assoc Prof Dr. Choong Kwai Fatt (UM) & Assoc Prof. Dr. Lai Ming Ling (UiTM) 1
B5. How many full-time employees (including yourself) are employed in your company?
<5 Between 5 & 19 Between 20 & 50 51-100
101-150 >150
B6.1 What is your company’s annual sales turnover in 2007?
< RM200,000 Between 200,000 – 250,000
Between RM250,000 & RM500,000 Between RM500,000 & RM1 million
Between RM1 million & RM5 million Between RM5 million & RM10 million
Between RM10 million & RM25 million >RM25 million
B6.2 What is your company’s annual sales turnover in 2008?
< RM200,000 Between 200,000 – 250,000
Between RM250,000 & RM500,000 Between RM500,000 & RM1 million
Between RM1 million & RM5 million Between RM5 million & RM10 million
Between RM10 million & RM25 million >RM25 million
B6.3 What is your company’s annual sales turnover in 2009?
< RM200,000 Between 200,000 – 250,000
Between RM250,000 & RM500,000 Between RM500,000 & RM1 million
Between RM1 million & RM5 million Between RM5 million & RM10 million
Between RM10 million & RM25 million >RM25 million
B7.1 What is your company’s paid up share capital in 2008?
≤ RM100,000 Between RM500,001 – RM1 million
Between RM100,001 – RM200,000 Between RM1 million – RM1.5 million
Between RM200,001 – RM300,000 Between RM1.5 million – RM2.0 million
Between RM300,001 – RM400,000 Between RM2.01 million – RM2.5 million
Between RM400,001 – RM500,000 >RM2.5 million
B7.2 What is your company’s paid up share capital in 2009?
≤ RM100,000 Between RM500,001 – RM1 million
Between RM100,001 – RM200,000 Between RM1 million – RM1.5 million
Between RM200,001 – RM300,000 Between RM1.5 million – RM2.0 million
Between RM300,001 – RM400,000 Between RM2.01 million – RM2.5 million
Between RM400,001 – RM500,000 >RM2.5 million
B8. Is your company a subsidiary within a group of companies?
Yes (please state number of entities____) No
B9. Does your company engage tax agent to handle tax affairs?
Yes No (Go to QB11 onwards)
B10. How much is the tax agent’s fee per year?
≤ RM2,000 RM6,001-8,000 RM12,001-14,000
RM2,001-4,000 RM8,001-10,000 RM14,001-16,000
RM4,001-6,000 RM10,001-RM12,000 > RM16,000
A Joint Research of Assoc Prof Dr. Choong Kwai Fatt (UM) & Assoc Prof. Dr. Lai Ming Ling (UiTM) 2
B11. Currently, the tax rate for SMEs with chargeable income of RM500,000 or less is 20%, in
your opinion, is it reasonable? (The paid-up capital has to be < RM2.5million)
Yes No (What rate will you propose? Please state: -Threshold (RM)________chargeable income
-Rate(%)_____________
B12. Which of the following, you wish the government should take to lighten the tax compliance
burden of SMEs? Please tick only ONE.
To lower the tax rate to ____ % on _____________ chargeable income
To reduce penalties for tax non-compliance to ____ % (currently is 45%)
To allow more expenses to qualify for double deduction; state the expenses
1.
2.
3.
4.
Exemption of income tax for SMEs on ____ % chargeable income
Exemption of import duty for SMEs
Special simplified income tax system for SMEs ie. tax on revenue/turnover instead of
chargeable income
B13. Are you aware of the following tax incentives provided under the Income Tax Act/
Promotion of Investment Act which are available for SMEs to claim? Please tick (√) the
relevant box in B13(i) to (xiii).
Yes No Not sure
i. SME can apply for pioneer status, to get tax exemption for 5
years completely
ii. SME can claim investment tax allowance, to get exemption of
income based on capital expenditure incurred
iii. SME can claim reinvestment allowance, to get exemption of
income based on capital expenditure incurred
iv. SME can get income tax exemption on increased export of
goods and services
v. SME who is a Malaysian international trading company can get
for income tax exemption for 5 years
vi. SME can get business tax deduction on acquisition of foreign
owned company
vii. SME can get business deduction on cost of acquisition
proprietary rights
viii. SME can get double deduction on research & development
A Joint Research of Assoc Prof Dr. Choong Kwai Fatt (UM) & Assoc Prof. Dr. Lai Ming Ling (UiTM) 3
B13. Are you aware of the following tax incentives provided under the Income Tax Act/
Promotion of Investment Act which are available for SMEs to claim? Please tick (√) the
relevant box in B13(i) to (xiii). (Cont’d)
Yes No Not sure
ix. SME can get double deduction on insurance premium paid on
import, insured with an insurance company incorporated in
Malaysia.
x SME can get double deduction on insurance premium paid on
export, insured with an insurance company incorporated in
Malaysia.
xi SME can get double deduction on remuneration paid to
disabled employees
xii SME can get double deduction on promotional export expenses
xiii SME can get 100% deduction on entertainment expenses
wholly related to sales
B14. Are you aware of the following record keeping requirement? Please tick (√) the relevant
box.
Yes No Not sure
i. Business transactions must be recorded into accounting books
within 60 days
ii. Accounting books must be kept for 7 years
iii. SMEs run the risk of being selected for tax audit once in every 5
years
iv. Incorrect tax return will be fined 45% on tax undercharged
v. Tax evasion will be fined 300% on tax undercharged
vi. As at 1.7.2009, the IRBM/LHDN has published 40 Public Rulings
vii. The IRBM/LHDN has re-issued Tax Audit Framework on 1
January 2009
B15. Please tick (√) the relevant answer for the following statements
Not
Statement Yes No
sure
a. Do you know a company is required to estimate tax payable 30 days
before the beginning of a basis period?
b. Do you know estimated tax payable must be not less than 85% from
the estimated or revised estimated tax payable of immediate
preceding year?
c. Do you know a company can revise their tax payable estimation on
the six and/or nine month?
d. Do you know a company need to make the first instalments by the
10th of the second month of the basis period?
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B15. Please tick (√) the relevant answer for the following statements (Cont’d)
Not
Statement Yes No
sure
e. Do you know when actual tax payable exceeds the original estimate
or the revised estimate by an amount exceeding 30% of the actual
tax payable, the difference will be subject to a penalty of 10%?
f. Do you know there will be a 10% penalty for every late payment of
instalments?
g. Do you know there will be a 10% + 5% penalty for a late payment of
balance of tax payable?
B16. Please tick (√) the relevant answer for the following statements
Strongly Slightly Neutral Slightly Strongly
Statement
Disagree Disagree Agree Agree
a. It is difficult to estimate tax payable
for a company 1 2 3 4 5
b. There are too many tax deadlines to
be remembered 1 2 3 4 5
c. The tax laws always change
1 2 3 4 5
d. The tax laws are difficult to
understand 1 2 3 4 5
e. The Public Rulings are not helping me
to understand the tax laws better 1 2 3 4 5
f. IRBM always delay tax refund to my
company 1 2 3 4 5
g. IRBM is slow in responding to tax
correspondence 1 2 3 4 5
h. IRBM’s advice is not sufficiently
accessible 1 2 3 4 5
I. Cost of tax agent is too high
1 2 3 4 5
B17. How much time on average does it takes you PER YEAR to familiarize yourself with all the
obligations and changes in the Income Tax laws and regulations related to SMEs?
2-4 days 4-8 days 8-12 days 1mth 2mth > 3mth
Section C: SMEs and Tax Audit
C1. Has your company/business been selected for tax audit (field audit) in the past 5 years?
Yes No (please go to Question C21 on page 8, thank you)
C2. How many times have your company been selected for tax audit in the past 5 years?
Once Twice Three times Four times Every year Not sure
A Joint Research of Assoc Prof Dr. Choong Kwai Fatt (UM) & Assoc Prof. Dr. Lai Ming Ling (UiTM) 5
C3. How do you react to tax audit/s conducted on your company? (You may tick more than
one)
I accept it as normal course of the tax process
Initially worried but feel relief upon knowing the purpose of tax audit
Concerned about possible mistakes and additional tax or tax penalty after tax audit
In my opinion, the IRBM/LHDN use tax audit/s to collect more tax from SMEs
Others (please specify:_____________________________________________ )
C4. Was adequate time given to your company to prepare the accounting document for tax
audit/s?
Yes No
C5. How long did it take for IRB tax auditors to finalise tax audit/s?
1mth 2mth 3mth 4mth
5-6mth 1 year > 1 year
C6. In your opinion, are tax audits conducted professionally by the IRB tax auditors?
Yes No
C7. Did tax audit disrupt your business operation?
Yes No Some times
C8. Was there a tax adjustment or a discovery of under declared tax after tax audit/s?
Yes No Some times
C9 What is the additional tax payable compared to original tax?
< 10 % 10 - 20% 30 - 40 % > 50%
C10 What was the main cause of the outcome?
Unaware of tax legislation charges
Tax agent’s mistakes
Clerical errors
Insufficient documentation evidence to support claim
Too many private transactions with directors/related company
Industry practices not acceptable by IRB
IRB deemed business profit based on industrial margin
Others (please specify_______________________________________________)
C11. What was your overall experience regarding a tax audit interview or negotiation during the
finalisation stage?
Good and Pleasant Unpleasant and tedious
Not as good as I have expected Very tense
IRB very demanding on tax settlement
Others (please specify_______________________________________________)
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C12. What was your level of satisfaction on IRB tax auditors’ justification in respect of the tax
adjustment made after the tax audit?
Very satisfied Dissatisfied Satisfied
Very dissatisfied Neutral/No comment
C13. Please tick (√) the relevant answer for the following statements
Strongly Slightly Neutral Slightly Strongly
Statement
Disagree Disagree Agree Agree
a. IRB tax auditors request too many
documents that are often not used 1 2 3 4 5
b. IRB tax auditors request documents
that are hard to locate or retrieve 1 2 3 4 5
c. IRB tax auditors require documents in
multiple copies and they may request 1 2 3 4 5
them anytime
d. IRB tax auditors are not happy with
the explanation provided by my staff 1 2 3 4 5
e. IRB tax auditors did not accept the
documents provided and question the 1 2 3 4 5
documents authenticity
f. Important documents are misplaced
by IRB tax auditors 1 2 3 4 5
g. The top management in my company
refuse to provide confidential 1 2 3 4 5
documents for tax audit
C14. Did you engage your tax agent to represent your company for tax audit?
Yes No (Go to C17)
C15. How much did you pay to your tax agent for representing you for tax audit?
≤ RM2,000 RM2,001-4,000 RM4,001- 6,000
RM6,001- 8,000 RM8,001 –10,000 > RM10,000
C16. Did your tax agent manage to reduce or negotiate for a tax reduction from a tax audit
adjustment?
Yes No (go to C19, thank you)
C17. Why your company did not engage tax agent for tax audit?
The fee charged by my agent is too high
My staff can handle tax audit
Tax agent refuses to take up the assignments
Others (please specify _________________________________________)
C18. Is your tax agent helpful in the tax audit? Yes No
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C19. How you rate the services rendered by tax agent overall in advising you on tax matters?
1 2 3 4 5 6 7 8 9 10
very frustrated very satisfied
C20. How you rate the services rendered by tax agent overall in advising you on tax audits?
1 2 3 4 5 6 7 8 9 10
very frustrated very satisfied
C21. Do you have any comment or suggestion regarding SMEs and taxation?
Assoc Prof Dr. Choong Kwai Fatt
Faculty of Business & Accountancy, Universiti Malaya, 50603 Kuala Lumpur
Thank You Very Much for Your Time & Participation
Email: kwaifatt@um.edu.my
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