The Income Tax Act 1967 imposes various penalties for non-compliance. These include:
(a) Non-submission of return
Return Form BE for YA 2009 needs to be submitted by or before Apr 30, failing which taxpayers incur a:
(i) Penalty that is 3 times of tax
(ii) Fine between RM300 to RM2,000
In practice, the tax authorities impose 2%-20% on the tax payable as the penalty instead of the statutory formula of 300%.
(b) Non-payment of final tax
The employer deducts the employee’s monthly tax which is paid to IRB on the 10th of every month. The difference between the actual tax and the total tax deducted by the employer must be paid to IRB on / before Apr 30. Failure to pay the final tax on Apr 30 will result in a late payment penalty of 10% being imposed.
An additional 5% will be imposed if the final tax or penalty is still not paid by June 30 (60 days after Apr 30)
(c) Not keeping sufficient records
Under the self assessment system, an employee is required to keep sufficient records on his tax affairs for seven years. Only the tax return Form BE is submitted to IRB by or before Apr 30.
These records comprise a copy of Form BE, salary slips, Form EA (Statement of Employment Income), and credit card statements in relation to petrol claims, travelling, parking, and toll charges incurred in relation to official duties.
Failure to maintain sufficient records is an offence and the penalty will be:
(i) A fine between RM300 to RM10,000 or
(ii) Imprisonment ≤ 1 year