What’s The Penalty For Filing Your Income Tax Late?

Category: Budgets & Tax

As the first deadline to file your income tax has just passed, you may be wondering what could happen if you file your taxes late?

From getting fined, having to pay triple the amount of your tax to being barred from leaving the country, below is a list of what can happen if you don’t take you tax payment seriously.

Related: Malaysia Income Tax e-Filing Guide For Newbies

You will have to pay more

If you are late when submitting your tax form, you will need to pay a penalty. This will give you unnecessary costs that could have easily been avoided. The penalty will be imposed if there is a delay in the submission of your Income Tax Return Form. All Income Tax Return Forms must be submitted within 30 days from the date stated on the form or for period that has been set by the government. The amount of penalty you will have to pay is as per below:

Type of OffencesSource of IncomePenalties

Pay taxes after 30th April

Non-Business

a. 10% increment of the tax payable amount, and

b. Additional 5% increment on the balance of (a) if payment is not made after 60 days from the final date

Pay taxes after 30th June

Business

Aside from having to pay more, if you’re late to submit your tax form, you will get fined if you understated your taxes, don’t submit a form at all or for various other offences. In the table below the fines are stated as follows:

Type of offencesAmount of fine
Failure (without reasonable excuse) to provide an Income Tax Return FormRM200 to RM20,000 or imprisonment or both
Failure (without reasonable excuse) to give notice of chargeability to taxRM200 to RM2,000 or imprisonment or both
Make an incorrect tax return by neglecting or understanding any incomeRM1,000 to RM10,000 and 200% of tax undercharged
Give any incorrect information in matters affecting the tax obligation of a taxpayer or any other personRM1,000 to RM20,000 or imprisonment or both and 300% of tax undercharged
Willfully and with intent to avoid or assist any other person to avoid taxRM1,000 to RM20,000 or imprisonment or both and 300% of tax undercharged
Assist or advice (without reasonable care) others to under-declare their incomeRM2,000 to RM20,000 or imprisonment or both
Fails (without reasonable excuse) to comply with an order to keep proper records and documentationRM300 to RM10,000 or imprisonment or both
Fails (without reasonable excuse) to comply with a notice asking for certain information as required by IRBMRM200 to RM2,200 or imprisonment or both
Fails (without reasonable excuse) to give notice on change of address without 3 monthsRM200 to RM2,000 or imprisonment or both

You are barred from leaving the country

If you have arrears or you have not been paying your taxes, you will not be able to leave the country as you will appear on the list under the immigration department of individuals who are blacklisted from travelling overseas. And on top of that, if you make an attempt to leave the country without paying your taxes, you will also be fined RM200 to RM2,000, be imposed jail time or both.

You may have to go to jail

You may have already noticed by now that most penalties pertaining to tax involves imprisonment. The worst-case scenario that could happen if you don’t take your tax payment seriously would be a combination of jail time and being fined. You should also understand the difference between tax avoidance and tax evasion. If you don’t file for your income tax without a reasonable excuse, that is considered as tax avoidance. It carries a punishment of RM200 to RM2,000 fine, imprisonment, or both.

While tax evasion means deliberately misrepresenting or concealing your matters to tax authorities. This usually happens when people want to reduce their tax and can include dishonest tax reporting like under-declaring income, profits or gains, or overstating tax relief and deductions. You can be fine no less than RM1,000 and up to RM20,000, imprisonment up to three years or both.

But that’s not all, you will also have to pay a special penalty of triple the amount of tax which has been undercharged in consequence of the offence or which would have been undercharged if the offence had not been detected. Therefore, it is important to make sure you pay tax on time, and also declare and pay for it correctly because you can get into a lot of trouble if do not pay your tax or if you underpay or under declare.

tax-late-pay-malaysia

However, you will receive benefits if you file your taxes early. The main benefit you can get is receiving your tax refunds faster. Most taxpayers are on a monthly tax deduction (also known as Potongan Cukai Bulanan PCB) this means that there is a high chance that you are overpaying your taxes as tax reliefs are not taken into account for the monthly tax deduction.

Hence, when you file your income tax and include your bank account details, it will enable the Inland Revenue Board Malaysia (IRBM) to deposit your tax refund directly into your bank account. Taxpayers who use e-filing will generally receive their tax refund 30 days after declaring their income, which is why the earlier you file for your taxes, the earlier you get your refund.

You don’t want to get fined for filing your taxes late or not at all. Remember, there may be a possibility that e-filing might not work properly because of the large number of users who are rushing to get it done at the last minute, so do not wait until the deadline to pay your taxes. And do make sure to double-check all information before you file your taxes to avoid receiving a penalty.

Related: Income Tax For Foreigners Working in Malaysia 2021