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Abstract

This study examines the clarity of the public ruling on the interpretation of section 4A of the Income Tax Act 1967 (ITA) in respect of withholding tax for better compliance. Section 4A of the ITA imposes the statutory obligation of withholding tax on income derived from Malaysia by the non-resident. Section 4A of the ITA is a peculiar provision and classified as a “special classes of income”. Despite having the law, the Director General of Inland Revenue (DGIR) could not successfully enforce it as there have been challenges made by taxpayer questioning the clarity of the law. Uncertainty and ambiguity of the law lead to non-compliance of the law. So, how is the ambiguity of the law is resolved? Thus, this study is necessary as it contributes not only to the international literature but also to the policy maker.

Keywords: Non-resident, withholding tax, ambiguity, complexity, clarity, compliance

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