Malaysia: Reminders on Timing of Filing Returns by Individuals and Employers
In this article we remind taxpayers – employers and employees – of some compliance obligations in year 2012.
Filing of Returns by Individuals
Under the “Self Assessment System” for individuals in Malaysia, individuals are required to file the 2011 tax returns to the Inland Revenue Board by 30 April 2012, unless they have business income.
The filing deadline for individuals carrying on a business, such as a sole proprietor or partnership, is 30 June 2012.
As a matter of practice, with effect from 1 October 2011, the Inland Revenue Board has started to impose penalties ranging from 20 percent to 35 percent of the gross tax payable (before deduction of the tax paid by the employer and/or tax instalments) for the late filing of tax returns. In addition, failure to remit the balance of tax payable by the due date will attract a penalty of 10 percent. A further 5-percent penalty will be imposed on any balance remaining unpaid after 60 days.
The penalties for late filing to be imposed can be illustrated as follows:
Tax liability MYR 10,000
Less: monthly tax deductions made MYR 10,500 ————————– Tax over-payment (MYR 500)
i. Filed within a 12-month period after the filing deadline = MYR 10,000 x 20% = MYR 2,000
ii. Filed within a 24-month period after the filing deadline = MYR 10,000 x 25% = MYR 2,500
iii. Filed within a 36-month period after the filing deadline = MYR 10,000 x 30% = MYR 3,000
iv. Filed more than 36 months after the filing deadline = MYR 10,000 x 35% =
[MYR 1 = USD 0.325 | MYR 1 = GBP 0.205 | MYR 1 = EUR 0.245 | MYR 1 = AUD 0.31]
Filing of Returns by Employer
Every employer must furnish the 2011 return (Form E) on its employees’ employment income no later than 31 March 2012.
In addition, the employer must also have prepared and delivered to its employee the statement of remuneration (Form EA) for the year ended 31 December 2011, on or before 29 February 2012.
Please note that an employer who without reasonable excuse fails to submit the return as well as prepare and deliver the statement of remuneration shall be guilty of an offence and upon conviction, be liable to a fine ranging from MYR 200 to MYR 2,000 or to imprisonment for a term not exceeding six months or both.
The Malaysian Inland Revenue Board (“MIRB”) has recently issued the 2012 Filing Programme for submission of tax returns. Among the key points to note are:
1. Where the due date for filing of the Income Tax Return falls in 2012, a grace period of:
a. 15 days is granted for e-filing (this is to encourage e-filing of tax returns); and
b. 3 working days is granted for filings made by post.
2. There is no grace period for filings made by hand.
3. The above grace periods also apply to the payment of the balance of tax payments pertaining to tax returns submitted via e-filings and filings made by post. The balance of tax payable is after deduction of the tax instalments paid as indicated in the tax return.
It is pertinent to note that the MIRB has verbally mentioned that the grace period will only apply for 2012 and no extension would be granted in subsequent years.
To avoid facing penalties for late returns, individuals/employers should file tax returns by the deadline. Thus, it is advisable to start compiling at an early date those documents that are required in order to prepare and file the returns.