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Tax Penalty For Tax Return

Tax Return (and Payment, if applicable)

Example:

For a Sdn Bhd with financial year ended January 31, 2023, the Tax return (Form C) will be due on 31 August 2023 (and grace period to file the tax return by September 30, 2023)


However, for payment of tax, due date will be on 31 August 2023 (Section 103(12) ITA1967)

(last day of seventh month from accounting year end)


What if tax return Form C not submitted on time?

Section 112(1) ITA1967 - Fine is RM200.00 to RM20,000.00 / Imprisonment for a term not exceeding 6 months / Both


Once Form C not submitted on time, Section 103 also kicks in on non-compliance to Payment of Tax


10% on 'unpaid' Tax after the due date. (in this example, due date is 31 August 2023)


Why? Because how can the 'amount due' be ascertained if Form C not submitted?

Unless a company pay the tax in advance without the Form C, which is highly unlikely, except for tax installments made under S107(9) or known as CP204 payment

.


Therefore, the 10% will only be imposed on the 'unpaid' tax due only.

Refer Section 103(3) for details.

















 


Non-Payment of Tax due -- Travel restriction

Other than the 10% additional tax under S103 for late payment, Travel Restriction may be imposed on company director under Section 104 ITA1967 for failure to pay tax due (under Section 103, as well as Section 107 (tax estimation and installment)





Finance Act 2019

Pursuant to the Finance Act 2019:

  • Section 77B(4) of the ITA was amended to remove the imposition of the further penalty of 5% on the increased sum (i.e. amount understated plus a 10% penalty). The 10% penalty is the final increase.

  • Section 103(1A) of the ITA was amended to remove the imposition of the further penalty of 5% on the balance of unpaid taxes, where any balance remains unpaid after 60 days from the stipulated due date.

Reference

  1. Operation Guideline 1/ 2020 -- PROCEDURE ON SUBMISSION OF AMENDED RETURN FORM

  2. Summary of Offences, Fine and Penalty




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