Tax disincentives arising from judicial decisions on the deductibility of expenses

Using accounting standards as a benchmark for a neutral tax base, this article identifies tax disincentives arising from judicial doctrines in Malaysia that, in effect, penalize taxpayers by denying or delaying the deductibility of certain non-personal expenditures. Failure by the legislature to overturn the decisions is treated as implicit endorsement of the outcome. Each disincentive is therefore subject to conventional tax expenditure analysis to determine whether the non-revenue goals are appropriate and whether tax penalties are an effective way of achieving the desired outcomes.