Taxing Issues in Deferred Business Income

Chee Fei Chang, Shir Li Ng, May Yee Ng

Research output: Chapter in Book/Report/Conference proceedingChapter


This essay analyses the amendments made to Sec.24 of the Malaysia Income Tax Act 1967 that charges income tax on income received in advance (deferred income) as opposed to the traditional accrued basis. These changes are controversial on five grounds. First, it causes cash flow constrains to businesses due to upfront payment of tax without receipt of the actual income. Secondly, there will be a temporal mismatch between the time of which the income is assessed and deduction that is available for deductible expenses. Thirdly, the treatment will lead to misalignment between tax codes and accounting practices, in contrary to international efforts to align both for better governance. Fourthly, a system that is deemed unjust will inculcate deliberate non-compliance; and fifthly, taxing on deferred income is a double-jeopardy on top of the existing goods and services tax. The amendments are unreasonable, unprincipled and unequitable. Yet, it takes effect from year of assessment 2016 while many doubts remain unanswered. It is proposed that the changes be halted permanently or temporarily pending further adjustment. The revenue board is also being cautioned on the importance of being congruent with internationally accepted standards and trade practices.
Original languageEnglish
Title of host publicationMalaysia’s Taxation System: Contemporary Practices, Issues and Future Direction
EditorsMohamed Ariff Syed Mohamed, Kim Leng Yeah
Place of PublicationKuala Lumpur
PublisherSunway University Press
Number of pages23
ISBN (Print)978-967-13697-9-1
Publication statusPublished - 2020


  • Income Tac Act
  • Section 24
  • Malaysia
  • deferred income

ASJC Scopus subject areas

  • General Business,Management and Accounting


Dive into the research topics of 'Taxing Issues in Deferred Business Income'. Together they form a unique fingerprint.

Cite this