Tax Leakages of Contract Income Declaration by Medical Professional in Malaysia

Syaiful Ammar Ahmad, Norhayati Alias, Noor Hasniza Haron


The study is conducted to investigate whether the current practice of declaring contract income by medical professionals is appropriate and the total tax payable made is accurate. This study will examine tax leakages of contract income declaration due to different usage of codes tax file, namely C (company), SG (employment and other income) or OG (individual income derived from business, employment and other income) and to suggest appropriate tax file of the contract income declaration made by medical professionals. Secondary data from completed tax audit cases in an Inland Revenue Board of Malaysia branch collected by the External Tax Audit Department are randomly selected and examined. It is concluded that there is a significant shortfall of the amount of tax declared when the tax file C and SG were used by medical professionals. The differences could be due to the different tax rate applicable for different code of the tax file. To overcome this, any contract received by medical professional is suggested to be declared under the tax file OG instead of tax file C and SG. The study is significant as the result able to highlight the importance of declaring income accurately via appropriate channel and forms. Inland Revenue Board Malaysia, as a tax administrator could take immediate action to mitigate the problems incurred as medical professionals in Malaysia contribute a significant amount of tax payable. Possible initiatives to improve these include issuing new public ruling to enhance tax enforcement, training courses to enhance awareness and knowledge in relation to tax submission.


Taxable income, tax leakages, contract income, medical professionals

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