According to Section 114(1A) of the Income Tax Act 1967, wilful evasion of tax means any action or deed deliberately performed or done with the purpose or intention of evading or assisting any other person to evade tax.
The term “evasion” is defined as the action of evading or escaping by artificial or contrivance, escape, dodging, prevarication, shuffling, excuse or subterfuge. Tax evasion is both immoral and illegal.
Any person who assists in, or advises with respect to, the preparation of any return where the return results in an understatement of the liability for tax of another person shall, unless he satisfies the court that the assistance or advice was given with reasonable care, be guilty of an offence and shall, on conviction, be liable to:-
a) A fine ranging from RM2,000 to RM20,000; or
b) Imprisonment for a term not exceeding 3 years; or
What is the provision for distinguishing between tax evasion and legal tax avoidance schemes under the ITA, and how does it apply to taxpayers?
In Accordance to Section 114(2) of Income tax Act, the provision only applies to situations where the taxpayer has carried out an evasion scheme which is prohibited by the ITA. It would not apply to legal tax avoidance scheme which has the tax implication of minimising the tax.
For further details, please refer to our previous article: Tax Avoidance and Tax Evasion.
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