1.0 Introduction
Income tax is defined as tax on money people earned income, which mean they (taxpayers) paid to the national government. The income that must be charged includes wages, salaries, commission, dividends, interest and etc. Most of the countries employ a progressive income tax system in which higher income people will pay a higher tax rate compare with the lower income people. Normally, it has two types of income tax for each country, which are personal income tax and corporation income tax (business dictionary).
In addition, income tax is very important for the country’s revenue. The government received the progressive income tax for growing up the country’s wealth. It is designed for the government to contribute the wealth more evenly in a population, and to serve as automatic fiscal stabilizer to reduce the effects of economic cycles. Another word said that, income tax is a key source of funds that the government uses to fund its activities and serve the public (investopadia, 1993). In Malaysia, income tax is collected by Ministry of finance and Inland Revenue Board (IRB). On the other hand, China possess two collectors of income tax. One of them is National Tax Bureau which collects individual income tax, and enterprise income tax is collected by Local Tax Bureau (Jljgroup, n.d.).
For this assignment, we will compare and contrast the tax policy between China and Malaysia. As we know that Malaysia in this assign, we’ll investigate both countries tax strategy and how the country to determine the resident status and territorial basis. Besides, we also differentiate the tax rates on personal income tax and corporate income tax in both countries.
2.0 Personal Income Tax
2.1 Resident Status
The determinations of resident of Malaysia and China have the significant differences on the numbers of days and days of temporary absences.
For residential individual, according to the Section 7 of the Tax Act, an individual can be qualified...