RECENTLY PUBLISHED

List of LHDN Fines and Penalties 2024

Updated on: Jul 1st, 2024

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	Section 107D of ITA 1967	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)	The Stamps Act 1949	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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