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Outline of Presentation
Administrative Structure in Malaysia
Government Revenue
Issues and Challenges
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Part I
Part III
Part II
Outline of Presentation
Administrative Structure in Malaysia
Revenue collecting agencies Petroleum operations in Malaysia Tax Administrative structure
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Part I
MINISTRY OF FINANCE
INLAND REVENUE BOARD
CUSTOMS DEPARTMENT
OTHER AGENCY
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OTHER AGENCY
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ACREAGE
Malaysian onshore and offshoreOverlapping areas :
-Thailand-Vietnam
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PETROLEUM OPERATIONS IN MALAYSIA1. Concession System
The State Authority awarded to companies with expertise
2. Production Sharing Contract (PSC)
ƒ Exploration, development and production of crude oil andnatural gas activities are undertaken and managed throughProduction Sharing Contract(PSC) with PETRONAS .
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ƒ 3. Risk Service Contract ( RSC )
ƒ The IOC bears all the exploration costs in exchange for anagreed-on fixed fee by government
International Oil companies
Petronas CarigaliSdn Bhd
PETRONAS
Cost Oil
Government Royalty
To contractors under the PSC term
Contractors
Oil and Gas entitlement under PSC
DIRECTOR
UPSTREAM DIVISION
MIDSTREAM DIVISION
TRANSFER PRICING UNIT
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DOWNSTREAM DIVISION
Functions:
To administer & ensure compliance with
Income Tax Act 1967 (ITA) Petroleum (Income Tax) Act 1967 (PITA)
Main Activity:
Audit Tax Compliance Field Audit - focused on non-compliance issues
Desk Audit – for tax appeal casesgeneral non-compliance issues, ‘house keeping’
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SUPPORTING UNITS:
identify taxpayer through activities such as publications –expanding taxpayers base.
take action on taxpayers who fail to comply with submission of returns
registration of new files based on information discovered/received
request soft copy of ledger
analysis of data to identify risks
Others: Research on petroleum industry Preparation and analysis of petroleum tax
collected IRB management and other relevant organisation
eg Ministry of Finance, statistical Dept, PrimeMinister Department, feedback from Members ofParliament queries
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AUDIT CHALLENGES & ISSUES
High Technology / complex industry
Petroleum cos. - regulated industries, dealing with industry experts, specialized knowledge
To deal with contentious issues
Involved in international transactions, intricate business arrangements with related co.
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...AUDIT CHALLENGES & ISSUES
Turnover - large Transfer pricing issues Enhancing knowledge in the industry Design a better & co-ordinated data warehouse
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AUDIT PRACTICES - RESOURCES
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Tax Audit Manual Tax Audit Working Procedures Manual Audit Framework –Public Rulings Regulations and Guidelines Audit Directives Operations Directives Knowledge Based Portals
Outline of Presentation
Government Revenue Composition
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Part II
oRoyalty – production
o Tax – profit oil
oDividends - stakeholder
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27,748
33,934
29,753 26,971
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
2011 2012 2013 2014 2015
Petroleum
RM Million
Petroleum Tax - 2011 to 2014
Outline of Presentation
Issues and Challenges
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Part III
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Crude Oil prices
Matured Fields
Industry tax incentives
Evolving role of general auditors to specialists
Information sharing – Various Input Screen[VIS] / Enterprise Taxpayer Profile [ETP]
THANK YOUTERIMA KASIH
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