Inland Revenue Board of Malaysia (IRBM), also known as Lembaga Hasil Dalam Negeri (LHDN) in Malaysia is one of the main agencies responsible for collecting revenue for the Ministry of Finance. The Ministry of Finance, also known as MOF, is the governing body which is responsible for all government expenditure and revenue raising. The MOF is responsible for the development of economic policy and to prepare the federal budget yearly for Malaysia.
LHDN was established in accordance with the Inland Revenue Board of Malaysia Act 1995 to give it more autonomy especially in financial and personnel management as well as to improve the quality and effectiveness of tax administration. The main roles and responsibilities of LHDN can be summarized as being responsible for the overall administration of the direct taxes which fall under the following acts:
The Petroleum (Income Tax) Act 1967
The Real Property Gains Tax Act 1976
The Income Tax Act 1967
The Promotion of Investments Act 1986
The Labuan Offshore Business Activity Tax Act of 1990
The Stamp Act of 1949
LHDN is responsible for the following functions and duties:
To act as agent of the Government and to provide services in administering, assessing, collecting and enforcing payment of various types of taxes (income tax, petroleum income tax, real property gains tax, estate duty, stamp duties and such other taxes as may be agreed between the Government and the Board)
To participate in or outside Malaysia in respect of matters relating to taxation.
To provide advice to the government on any matters which are related to taxation, in addition to being required to liaise with the corresponding ministries and statutory bodies.
To perform such other functions as are conferred on the Board by any other written law.
To act as a collection agent for and on behalf of any body involved in respect to the recovery of loans due for repayment.
Under the self-assessment tax regime introduced in 2001, the major change in our tax system transferred the duty of accurately computing taxes from LHDN to the taxpayers. Love them or hate them, we all have to deal with the tax man - or in our case, LHDN. For the estimated two million active taxpayers in Malaysia, and especially for corporate taxpayers (companies), hiring a tax professional to help with obligatory annual tax payments is highly recommended.