The impact of British colonial rule on the Malaysian income tax system

Malaysia has a long history of colonisation by Europeans dating back to 1511, though this article focuses mainly on the colonisation by Britain from 1786 to 1957. It was during this era of British colonial rule that the first income tax statutes were introduced in the territories that are now Malaysia. Based on historical research methods, this article seeks to gain an understanding of the impact of British colonial rule on the development of Malaysia’s tax system. In the face of sustained and strong domestic opposition, the then British colonial governors exerted their power and introduced income tax in both Malaya and Singapore from 1 January 1948. The form of statute adopted was based on the Model Colonial Territories Income Tax Ordinance of 1922. There appeared to be very little, if any, consideration of the jurisdictional context in which it was to apply, either in terms of needs or suitability. That is, it appeared that that ‘one size fits all’ in respect of taxation in these colonies and taxation without representation was the norm. 1 Dr Ern Chen Loo is an Associate Professor at the Faculty of Accountancy, Universiti Teknologi MARA, Kampus Bandaraya Melaka, 110, Off Jalan Hang Tuah, 75300 Melaka, Malaysia and Visiting Research Fellow of UNSW Australia. Tel: +60 6 285 7130; Email: looern@yahoo.com. Corresponding author. 2 Dr Margaret McKerchar is a Professor at the School of Taxation and Business Law, UNSW Australia. Tel: +61 2 9385 9550; Email: m.mckerchar@unsw.edu.au. eJournal of Tax Research The Impact of British Colonial Rule on the Malaysian Income Tax System