After the submission of the companys Form C for YA2019 tax season, MalyTex Sdn. Bhd. (MTSB) had called for an exit meeting with your group. All the directors as well as top management of the company had attended this meeting.

One of the directors had raised his concern on the high income tax instalments made by the company every month. As the tax expense comprised of 15% of the companys profit before tax, he was apprehensive on the effect of such cash outflow on MTSBs cash holding and liquidity. In particular, the considerable cash outflows from the tax instalments paid could cause the company to miss out on potential profitable investments.

In view of this concern, the directors and top management of MTSB had asked your group to find ways to reduce the income tax instalments for future YAs, starting from YA2020. Nevertheless, your group had asked for time to discuss this matter before coming into an agreement with MTSB.

Required:

Discuss the mechanism of making estimation of income tax payable. Your discussion must also include applicable Sections from the Income Tax Act 1967, your professional responsibility as tax agent, and any potential consequence arising from non-compliance. Conclude your discussion by deciding whether you would agree with the proposition made by MalyTex Sdn. Bhd.

Notes: You are strongly recommended to refer to the relevant materials in IRBMs website (http://www.hasil.gov.my) to answer this Question.