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Transformative Tax Compliance in the Digital Era: Insights into Malaysia's New Sections 82B and 82C

Updated: Nov 25, 2023

Finance (No 2) Bill 2023 proposes new sections 82B and 82C.


The current Income Tax Act 1967 is amended by inserting after section 82A the following sections:


Duty to provide information and furnish documents for ascertaining chargeable income and tax payable


82B. (1) Where a person has furnished to the Director General a return in accordance with section 77 or 77A, that person shall provide information and furnish documents as may be determined by the Director General for the purpose of ascertaining his chargeable income and tax payable on an electronic medium or by way of electronic transmission within thirty days after the due date for furnishing of the return.


(2) For the purposes of subsection (1), the provisions under section 152A other than subsection (3A) shall apply accordingly with any necessary modifications. Duty to issue electronic invoice

82C. (1) Subject to this section, a person shall, in a year of assessment, issue an electronic invoice for each transaction in respect of any goods sold or services performed by the person for that year of assessment.


(2) For the purposes of subsection (1):-

  1. the Minister shall prescribe the persons who shall issue the electronic invoice and the particulars to be included in the electronic invoice; and

  2. the conditions and specifications under which an electronic invoice is to be issued shall be as determined by the Director General under the guidelines issued in accordance with section 134A.


(3) Any electronic invoice issued by a person in respect of goods sold or services performed under subsection (1) shall be transmitted electronically to and validated by the Director General.


(4) Where for any year of assessment, a person is required to issue an invoice under any other written law in respect of goods sold or services performed, the electronic invoice issued in accordance with subsection (1), including any other particulars as may be required shall be construed as an invoice issued under that law provided that where the particulars of electronic invoice are inconsistent with the requirements for the issuance of invoice under that law, the electronic invoice shall only be valid and enforceable for the purposes of this Act.


(5) Where for any year of assessment, an electronic invoice is issued in accordance with subsection (1), the Director General shall not be liable for any loss or damage suffered by any person due to any error or omission arising, appearing in an electronic invoice provided that the error or omission was made in good faith and in the ordinary course of the discharge of the duties of the Director General or occurred or arose as a result of any defect or breakdown in the service or in the equipment used for the issuance of the electronic invoice.


(6) Subject to the conditions as may be determined by the Director General, where for any year of assessment a person acquires any goods sold or enjoys any services performed, the person shall for that year of assessment issue a self-billed invoice in accordance with the conditions as may be imposed by the Director General and the invoice shall be treated as an electronic invoice.


(7) The Director General may, for any year of assessment in respect of any goods sold or services performed, determine a person to consolidate the number of transactions in respect of such goods sold or services performed in that year of assessment into a consolidated transaction invoice, and that person shall transmit the consolidated transaction invoice to the Director General within a specified time and in accordance with the conditions as determined by the Director General and such consolidated transaction invoice shall for the purposes of this section constitute an electronic invoice issued by that person.


(8) Where for any year of assessment, a person makes an error or mistake in respect of any electronic invoice issued in accordance with this section, the person may for the purpose of rectifying the error or mistake, issue a substitute electronic invoice within three days from the date of issuance of the defective electronic invoice.


(9) Where for any year of assessment, any goods sold or services performed by a person involves the issuance of a credit note or debit note, the person issuing the credit note or debit note shall make adjustments in ascertaining his chargeable income for that year of assessment accordingly.


(10) A person may, in respect of any goods sold or services performed by him in any year of assessment, add any additional particulars to the electronic invoice under this section.


(11) The provisions of the Personal Data Protection Act 2010 [Act 709] shall not apply to any personal data processed for electronic invoice issued or transmitted to the Director General under this section and any other related provisions of this Act.






Comment

The Finance (No 2) Bill 2023 proposes the addition of Sections 82B and 82C to the existing Income Tax Act 1967, aimed at modernising and streamlining tax compliance processes.


These sections introduce obligations related to information provision, document submission, and electronic invoicing, leveraging digital platforms to enhance efficiency and accuracy.

Section 82B - Duty to Provide Information and Furnish Documents

Overview:

  • Individuals who have filed tax returns must provide information and furnish documents electronically within thirty days of the return's due date.

  • Adopts provisions under section 152A, with modifications, to facilitate electronic submissions.

Tax Impact:

  • Promotes timely and accurate information exchange, aiding tax authorities in assessing chargeable income and tax payable.

Section 82C - Duty to Issue Electronic Invoice

Overview:

  • Requires individuals to issue electronic invoices for each transaction involving goods or services during a year of assessment.

  • Prescribes conditions, specifications, and guidelines for electronic invoicing.

  • Introduces self-billed invoices, consolidated transaction invoices, and provisions for error rectification.

Tax Impact:

  • Transforms traditional invoicing practices, enhancing efficiency and reducing errors.

  • Encourages compliance through digital record-keeping.


Section 82C(4) addresses situations where, in addition to the requirement under Section 82C(1) to issue electronic invoices, a person is also obligated by another written law to issue invoices for goods sold or services performed.


Key Points:

  • If a person is required to issue an invoice under any other written law (outside of the Income Tax Act), the electronic invoice issued under Section 82C(1) will be considered valid for the purposes of the Income Tax Act.

Example:

Let's say a company in Malaysia is required by the Sales Tax Act to issue invoices for the sale of certain goods.


Simultaneously, under Section 82C(1), they are required to issue electronic invoices for all transactions.


If the particulars of the electronic invoice issued under Section 82C(1) are consistent with the requirements of the Sales Tax Act, that electronic invoice will be considered valid under both the Income Tax Act and the Sales Tax Act.


This provision ensures that when a person is subject to multiple laws requiring invoice issuance, the electronic invoice issued under Section 82C(1) can fulfil the obligations of other laws, provided there is consistency in the particulars required.


It's important to note that any inconsistencies between the requirements of the electronic invoice under Section 82C(1) and the other applicable law may impact the validity and enforceability of the electronic invoice for the purposes of the Income Tax Act.

In conclusion, these amendments align with global trends in digital transformation and signify Malaysia's commitment to embracing technological advancements for efficient tax administration.


Related-Article:

Finance (No. 2) Bill 2023: Amendment of section 2 - https://www.ccs-co.com/post/finance-no-2-bill-2023-amendment-of-section-2


Budget 2024: Further Tax Deduction For Voluntary Carbon Market (VCM) - https://www.ccs-co.com/post/budget-2024-further-tax-deduction-for-voluntary-carbon-market-vcm


Amendment to Section 4 of the ITA 1967 - Gains from the Disposal of Capital Asset - https://www.ccs-co.com/post/amendment-to-section-4-of-the-ita-1967-gains-from-the-disposal-of-capital-asset


Amendment to Section 4B of the ITA 1967 - Extension of the Scope of the Non-Business Income - https://www.ccs-co.com/post/____a


Amendment to Section 6: Income Tax Rates on Capital Asset Disposals - https://www.ccs-co.com/post/amendment-to-section-6-income-tax-rates-on-capital-asset-disposals


New Section 15C of ITA: Tax of Disposal Gains from Foreign Companies with Malaysian Real Property - https://www.ccs-co.com/post/new-section-15c-of-ita-tax-of-disposal-gains-from-foreign-companies-with-malaysian-real-property Amendment to Section 44(7A): Expanded Business Allocation for Charitable Entities - https://www.ccs-co.com/post/amendment-to-section-44-7a-expanded-business-allocation-for-charitable-entities


Evaluating the Impact: Section 61 Amendment on Trust Taxation - https://www.ccs-co.com/post/evaluating-the-impact-section-61-amendment-on-trust-taxation


Amendment to S 77A: New Reporting Rules on Capital Asset Disposal - The Impact of Section 77A(1B) - https://www.ccs-co.com/post/amendment-to-s-77a-new-reporting-rules-on-capital-asset-disposal-the-impact-of-section-77a-1b


Amendment to S 77B: Understanding Section 77B's Latest Facets - Impact on Amendment of Tax Return - https://www.ccs-co.com/post/amendment-to-s-77b-understanding-section-77b-s-latest-facets-impact-on-amendment-of-tax-return


Evolution of Record-Keeping: Amendments to Section 82 - https://www.ccs-co.com/post/evolution-of-record-keeping-amendments-to-section-82


Transformative Tax Compliance in the Digital Era: Insights into Malaysia's New Sections 82B and 82C - https://www.ccs-co.com/post/transformative-tax-compliance-in-the-digital-era-insights-into-malaysia-s-new-sections-82b-and-82c



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