In  a  group  of maximum  4, you  are to  choose  two  Malaysian  public-listed  companies  from two different industries. More details on the composition of group and the list of group members are available in the assignment guidelines below. The companies must NOT be similar to those of other groups. For this purpose, you are advised to check comments and prior submission of companies name in the provided Google spreadsheet which can be found in myTIMeS prior to selecting the companies and enter your company names in the “ comment” column of the spreadsheet once you have decided the names. Failing to do so will result to zero marks awarded for this assignment. You are then required to download the required annual report of each company to address the following requirements.

QUESTION:

Malaysia has a territorial system of taxation. This means a company is considered resident in the country by the Inland Revenue Board of Malaysia (IRBM) if it is managed and controlled from inside the country and is taxed on all its income derived in Malaysia including profits from a business, dividends, interest, rents, royalties, premiums and other earnings. Malaysia adopts the single-tier system, under which dividends paid by it are not taxed. Foreign-sourced income is generally exempt unless the company’s business activities are either in shipping, insurance, air transport, or banking for the year of assessment 2021. The standard rate of corporate taxation in Malaysia is 24% for a resident company. But for companies with paid-up capital RM2.5 million or less, the rate is reduced to 17%. From year of assessment (YA) 2020 onwards, this Corporate Income Tax (CIT) is chargeable on the first RM600,000, with any excess in income being subjected to taxation at 24%.

Rudnick and  Gordon  (1996) however had pointed  out various  other methods to impose tax  on taxpayers. The article discussed different sources of wealth for a taxpayer and have debated the feasibility of imposing tax on the wealth of the taxpayer. This brought up the idea of wealth tax instead of the usual tax on income, tax on gains of asset and tax on the income of non-residents (withholding tax). Similarly, the idea of wealth tax was also proposed by a prominent figure from the Malaysian Institute of Accountants (MIA), SM Thanneermalai in 2021 and an article was published in theSun, highlighting the advantage of imposing wealth tax to reduce the income gap in Malaysia.

Sources:

https://www.incorp.asia/malaysia/services/tax/                                                                                     https://www.imf.org/external/pubs/nft/1998/tlaw/eng/ch10.pdf                                                   https://www.thesundaily.my/business/tax-matters-time-to-consider-wealth-tax-KE8363950

REQUIRED:

1.    Critically assess the proposal of wealth tax in the article by Rudnick and Gordon (1996). You are required to analyse wealth tax as proposed by Rudnick and Gordon (1996) and provide critical discussion on wealth tax in the context of your two (2) selected companies.

(15 marks)

2.    Compute  effective tax  rate  (ETR) for years  2017,  2018,  2019,  2020  and  2021  for your two selected companies. You are required to compare and contrast the computed ETR with the wealth of the selected two companies for the mentioned 5 years using your discussion from (1).

(10 marks)

3.    Based on your answer in (1) and (2), critically evaluate if IRBM will be able to collect more tax revenue if wealth tax is imposed at 1% compared to the current corporate tax of the two selected companies  from  2017  to  2021  and  the  extent  of  possible  tax  planning  if  wealth  tax  is implemented in Malaysia.

(15 marks)

4.    Based on your answer in (3), assess if the claims made by SM Thanneermalai on 20th  September

2021 theSun article concerning collection of tax revenue and risks of tax evasion are true. You are required to support your discussion using at least  3 academic journal articles excluding Rudnick and Gordon (1996).

(20 marks)

5.    Based on your answer from (1) to (4), critically assess if the implementation of wealth tax is in accordance with Adam  Smith’s  canons of taxation. You are required to  select  ONE canon of taxation to be discussed with the implementation of wealth tax and to support your answer with at least 3 academic journal articles excluding Rudnick and Gordon (1996).

(20 marks)

6.    Provide  a table to  summarise your  discussions  in  (1) to  (5) to  establish  a  clear  connection between arguments. Please use the question number as the title of the columns.

(10 marks)

This assignment must be presented in a report format with the question numbers as sub-topics or headings. You are expected to present the report neatly and in an organised manner to allow the reader to understand your discussions. This assignment is to be written by a group rather than individual. Thus, you are required to pay attention on the coherence of your writing. Allocation of marks for coherence is up to a maximum of 10 marks.

Assignment Guidelines

1.           Total marks of this assignment is 100. Marks achieved by students will be converted to 25%.

2.           Your answer should have a word count of approximately 3,000 words excluding references. Should your total word count exceed 10 percent of the word limits, the examiner retains the right to stop reading and no more credit will be awarded. The word count must be printed on the assignment cover sheet. Please note that the mark allocations should not be used as an indication of the word limit of each question, instead they serve to represent the effort and difficulty involved in achieving that criterion.

3.           Marks will be awarded based on the quality of your answers. You are encouraged to explain your answers in detail. Marks will be reduced accordingly for answers that do not meet the requirements of the questions.

4.      Submission deadline is Friday  18th   November 2022, 11 am. Timely submission is your responsibility and no excuses for late submission will be entertained, except for those who have been granted an extended submission date following an application made by the student in advance. Late penalty will be deducted at 5% per day up until a maximum period of five (5) days (weekends and public holidays are included), after which time the assignment will be assigned zero marks.

5.      You must submit a hardcopy of your assignment, accompanied by a cover page that presents your group number, group leader’s name, group members’ names and email address of each member (including the leader), into specific dropbox in campus. You are also required to submit a softcopy of your report containing only your answer for the group assignment into Turnitin via TiMes. Taylor’s University reserves the right to check the originality of your work. You, however, are NOT required to submit the printed copy of similarity index report.

6.      You are only allowed to use Microsoft Word, Font Size 12, Times New Roman, with 1.5 spacing throughout the write-up. Please label your sub-topics according to the questions.

7.      Plagiarism, which is an attempt to present another person’s work without acknowledging the source, is a serious academic offence and any students found to be doing so will be penalised.

8.      The module lecturer, Dr Tye Wei Ling will share the form for group member submission by week 2. You must pay ensure that the group is diversified enough to safeguard the balanced distribution across nationalities, gender and ethnics. This is to provide opportunity for you to  expand your  connections  and  understand  others  outside your  current networks. The lecturer is responsible to ensure this is achieved when approving the movements of members within the groups.

Assessment Criteria and Feedback