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List of LHDN Fines and Penalties 2024
Updated on: Jul 1st, 2024
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25 min read
The Inland Revenue Board of Malaysia (IRBM), known in Malay as Lembaga Hasil Dalam Negeri Malaysia (LHDN), is the principal agency responsible for collecting and administering taxes in Malaysia. Operating under the Ministry of Finance, LHDN manages the taxation system, ensuring that individuals and businesses comply with tax laws and contribute their fair share to national revenue. Among its many functions, LHDN is tasked with enforcing tax laws, conducting audits, and investigating cases of non-compliance.
One of LHDN's key responsibilities is imposing penalties for various tax-related offences. These penalties are designed to ensure compliance and deter tax evasion and other forms of non-compliance. This blog will discuss all the penalties and fines that LHDN can impose in 2024.
Income Tax-Related Penalties
Penalties, fines and punishment for General Tax Offences
Type of Offence | Provisions Under ITA 1967 | Penalties |
Failure to furnish an Income Tax Return Form without a reasonable excuse. | 112(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Failure to give notice of chargeability to tax without a reasonable excuse. | 112(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Submitting an incorrect tax return by omitting or understating income. | 113(1)(a) | Fine between RM1,000 and RM10,000 plus 200% of the tax undercharged |
Providing incorrect information affecting the tax liability of a taxpayer or another person. | 113(1)(b) | Fine between RM1,000 and RM10,000 plus 200% of the tax undercharged |
Wilfully evading tax or assisting another person to evade tax. | 114(1) | Fine between RM1,000 and RM20,000 and/or imprisonment up to 3 years plus 300% of the tax undercharged |
Assisting or advising others to under-declare their income without reasonable care. | 114(1A) | Fine between RM2,000 and RM20,000 and/or imprisonment up to 3 years |
Attempting to leave the country without paying tax. | 115(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Obstructing any authorized IRBM officer in carrying out their duties. | 116 | Fine between RM1,000 and RM10,000 and/or imprisonment up to 1 year |
Failing to comply with an order to keep proper records and documentation without a reasonable excuse. | 119A | Fine between RM300 and RM10,000 and/or imprisonment up to 1 year |
Failing to comply with a notice requesting certain information as required by IRBM without a reasonable excuse. | 120(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Failing to notify changes of address within 3 months without a reasonable excuse. | 120(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Penalty on Income Tax Return Form (ITRF)
Type of Offence | Provisions Under | Penalties |
Late submission of ITRF | ITA 1967 | Subject to penalty/tax increase under ITA 1967 |
Overdue payment | ITA 1967 | 10% late payment penalty plus an additional 5% if unpaid within 60 days |
Penalties for Late Payment of Income tax
Type of Offence | Source of Income | Provisions Under ITA 1967 | Penalties |
Paying taxes after 30th April. | Non-Business | 103(3) | 10% increase on the tax payable |
Paying taxes after 30th June. | Business | 103(3) | 10% increase on the tax payable |
Penalty for non-compliance with Payment of Estimated Income Tax
Type of Offence | Provisions Under ITA 1967 | Penalties |
Paying installments after 30 days of the set date. | 107B(3) | 10% of the instalment due |
Actual tax 30% higher than the revised estimate of tax. | 107B(4) | 10% of the difference between actual tax and estimated tax |
Penalty for Non-compliance of e-Invoicing Rules
Type of Offence | Provisions | Penalties |
Failure to issue an e-invoice, self-billed invoice, or consolidated transaction invoice | ITA 1967 120(1) | Fine between RM200 and RM20,000 and/or imprisonment up to 6 months |
Penalty for Non-Deduction or Non-Deposit of Withholding Tax
Type of Offence | Provisions | Penalties |
Non-deduction or non-deposit of withholding tax | Section 107D of ITA 1967 | Amount of unpaid tax plus 10% of the tax payable |
Continued non-deposit of withholding tax and penalty | Payment is disallowed as an expense until tax and penalty are paid |
Penalty on Non-Compliance of Transfer Pricing Rules
Type of Offence | Provisions | Penalties |
Failure to submit Transfer Pricing Documentation | 113B of ITA 1967 | Fine between RM20,000 and RM100,000 and/or imprisonment up to 6 months |
Penalty on Late Payment or Late Deposit of Stamp Duty
Type of Offence | Provisions | Penalties |
Late payment of stamp duty (within 3 months after deadline) | RM25 or 5% of the deficient duty, whichever is higher | |
Late payment of stamp duty (after 3 months but within 6 months after deadline) | RM50 or 10% of the deficient duty, whichever is higher | |
Late payment of stamp duty (after 6 months from the deadline) | RM100 or 20% of the deficient duty, whichever is higher |
Penalty under RPGT Act 1976
Type of Offence | Provisions | Penalties |
Failure to submit Form CKHT 1A / CKHT 1B within 60 days | Subsection 29(3) of the RPGT Act 1976 | Penalty up to 3 times the amount of tax charged |
Failure to submit Form CKHT 1A / CKHT 1B after the extended date | Penalty up to 3 times the amount of tax charged | |
Failure to declare the disposal of a chargeable asset | Penalty up to 3 times the amount of tax charged | |
Making an incorrect return or giving incorrect information on asset disposal | Subsection 30(2) of the RPGT Act 1976 | Penalty equal to the amount of tax under-declared (up to 100%) |
Making an incorrect return causes the acquirer to fail to remit payment | Subsection 14(5) of the RPGT Act 1976 | 10% increase on the amount of tax charged |
Conclusion
These are some of the common penalties that LHDN can impose for non-compliance with tax regulations. For other laws, such as the Petroleum (Income Tax) Act 1967, the Promotion of Investments Act 1986, and the Labuan Business Activity Tax Act 1990, it is advisable to refer to official documents and consult with a tax expert to ensure comprehensive compliance and an understanding of the specific penalties and regulations involved.
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