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