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Malaysia: Audit Framework for Goods and Services Tax Issued

(Oct. 17, 2016) The Royal Malaysian Customs Department has recently placed on its website a document outlining auditing procedures for the goods and services tax (GST). The Audit Framework was issued on June 20, 2016, and is designed to make audits systematic, transparent, and fair. (Janice Loke, Malaysia: GST Audit Framework Published, TAX NEWS SERVICE (Oct. 6, 2016), International Bureau of Fiscal Documentation (IBFD) online subscription database; Goods and Services Tax Audit Framework (Framework) (June 20, 2016), Royal Malaysian Customs Department (RMCD) website.) The Framework establishes that the fact of an audit being undertaken does not necessarily indicate that the registered taxpayer is not in compliance with the law. (Framework, § 1.)

Audits may be undertaken for four reasons:

  • to determine that the tax has been calculated and paid correctly and accurately;
  • to measure the level of compliance of registered taxpayers with their responsibilities under the Goods and Services Tax Act 2014 and to identify revenue risk;
  • to provide advice and guidance to persons who are registered under the Goods and Services Tax Act 2014; and
  • to act as a guideline for compliance audit officers in carrying out their duties with greater transparency and efficiency. (Id. § 2; Goods and Services Tax Act 2014, LAWS OF MALAYSIA, Act 762 (June 19, 2014), RMCD website.)

The Framework also defines the audit period; describes the process for those being audited, including the implementation of the audit itself and the exit conference that ends the process; outlines the necessary documents to be provided; lists the rights and responsibilities of those being audited; specifies that audit information is confidential; and discusses appeals and complaints. (Loke, supra.)