Tax Penalties

Tax Offences and Penalties

1. Tax Offences

An offence is committed under the Income Tax Act 1967 under the following section.
a) Section 77(1)-Failure to furnish a return by individual
b) Section 77(3)-Failure to give notice of chargeable income by individual arrives in Malaysia.
c) Late submission of Return Form after 2 years when the case is being audited or investigated.
d) Fraud, omissions and understatements.
e) Failure to comply with Notice.
f) Section 107C(2),(3) and (4)(a)-Failure by company to estimate of tax payable and payment by instalments.

2. Tax Penalties
Tax penalties and fine will be imposed under the following sections of the Income Tax Act for various tax offences committed

a)Section 112(1)
Liable to a fine between RM200 to RM2,000 or not more than 6 months imprisonment or both (for failure to furnish a tax return under S77(1) & S77A, or failure to give notice of chargebility under S77(3) ).

b)Section 112(3)
Where no prosecution were make, the Director General may require a taxpayer to pay a penalty of up to three time the amount of tax (for the offences under S77(1), S77A & S77(3) ).

c) Section 113(1)
Liable to a fine between RM1,000 to RM10,000 together with a special penalty of up to 200% of the amount of tax which has been understated(for incorrect return by omitting or understating, or incorrect information on the chargebility).

d) Section 113(2)
Where no prosecution were make, the Director General may require a taxpayer to pay a penalty equal to the amount of tax which has been understated (for incorrect return by omitting or understating, or incorrect information on the chargebility).

e) Section 114(1)
Liable to a fine between RM1,000 to RM20,000 or imprisonment of up to 3 years or both; together with a special penalty of up to 300% of the amount undercharged ( for wilful evasion, such as omission from a return; false statement in a return; false reply whether orally or in writing; and false books of account or false records).