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RESOURCES

 

TAXATION

OFFENCES, PENALTIES & COMPOUNDS


 1.0      Summary of Income Tax Offences

 

Offences

Without Prosecution

With Prosecution

 

1

 

Failure to furnish a return  [s 77(1), 77A(1)]
Failure to give notice of chargeability  [s 77(3)]

 

Penalty of three (3) times the amount of tax
[s 112(3)]

 

Fine between RM200 to RM2,000 or not exceeding six (6) months imprisonment or both. [s 112(1)]

 

 

 

 

2

Incorrect return

Penalty equal to the tax undercharged
[s 113(2)]

Fine between RM1,000 to RM10,000 and (plus) penalty equal to twice the amount of tax undercharged.
[s 113(1)]

 

(a)  omitting or understating income
(b)  provides incorrect information on income or chargeability [s 113(1) and (2)]

 

 

 

 

3

Wilful evasion
[s 114]

Not applicable

Fine between RM1,000 to RM20,000 or three (3) years imprisonment or both; plus penalty equal to three times the tax undercharged.
[s 114(1)]

 

 

 

 

4

Understatement of tax liability
[s 114(1A)]

Not applicable

Fine between RM2,000 and RM20,000 or  not exceeding three (3) years imprisonment or both.
[s 114(1A)]

 

 

 

 

5

Leaving Malaysia without payment of tax
[s 115]

Not applicable

Fine between RM200 to RM2,000 or not exceeding six (6) months imprisonment or both.
[s 115(1)]

 

 

 

 


2.0 Rate of Penalty under Subsection 112(3)

(a) Late submission of Return Form (Subsection 77(1) and 77(1A))
(b) Taxpayer's wife fails to declare her source of income after making a declaration in the Return Form.
 

A. Employment Case (SG) (except directors of controlled company)

Offences

Rates on tax payable

Min ( RM )

Max( RM )

First

2%

50

100

Second

5%

100

200

Third

10%

150

300

Fourth

10%

200

500

Fifth

10%

250

750

Sixth

15%

300

1,000

Seventh

15%

350

1,500

Eighth

15%

400

2,000

Ninth

15%

450

2,500

Tenth and Above

20%

500

3,000

B. Non-employment case (including directors of a controlled company)

Offences

Rates on tax payable

Min ( RM )

Max ( RM )

First

5%

200

2,000

Second

10%

300

3,000

Third

10%

500

5,000

Fourth

15%

600

6,000

Fifth

15%

800

8,000

Sixth

15%

1,000

10,000

Seventh

20%

1,200

12,000

Eighth

20%

1,500

15,000

Ninth

20%

1,800

18,000

Tenth

20%

2,000

20,000



3.0       Rate of penalty under Subsection 113(2)
(a) Late submission of Return Form after 2 years when the case is being audited Or investigated.
(b) Fraud, omissions and understatements.
 

 

Duration

Rate

Voluntary declaration (before the case being taken up for audit or investigation)

< 1 year

15%

1 year - < 3 year

20%

3 year - above

30%

 

 

Voluntary declaration (after taxpayer being informed but before the commencement of audit)

-

35%

For repeated:
 Rate of penalty:
60% of tax payable plus 10% for every repeated offence but the total penalties increased are subject to a maximum of 100%.
For investigation cases:



Rate of penalty:

Rate

A.

For offences involving omissions from or understatements in the Return Form not supported by accounts due to negligence.

60%

B.

For offences involving omissions from or understatements in the Return Form supported by accounts due to wilful default.

75%

C.

For fraud offences which involve understatements either in the Return Form or accounts of a deliberate nature.

100%

D.

Deliberate and persistent understatements.

Not less than 100%



4.0       Failure to comply with notice

Offences

Compound Payment

First

- RM 200 to RM 300

Second

- RM 300 to RM 500

Third

- RM 500 to RM 700

Fourth

- RM 700 to RM 1,000

Fifth and above

- Minimum RM 800 and maximum RM 2,000

 

5.0    Failure companies to submit estimate according to subsections
107C(2), 107C(3) and 107C(4)(a)

Estimate of Tax Payable

Compound Payment

RM 500 and less

RM 300

RM 501 to RM 1,000,000

RM 500

More than RM 1,000,001

RM 1,000