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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 .

ƒ

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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