What Happens If You Forget To File Your Income Taxes In Malaysia?

Few things are less exciting than doing your taxes. But alas, if you earn more than RM34,000 per year after deductions, you have to report your taxes. You should get this sorted by the deadline. If you forget to do this, you could face fines, penalties and even jail time. Here’s what you need to know.

What happens if you miss the deadline?

You can still file your tax return, but you may have to pay interest. According to the Inland Revenue Board of Malaysia (LHDN), failure to pay your taxes on time will result in a 10% increase in your tax liability.

If you forget to classify them, two scenarios can occur:

  • The LHDN may choose to sue you if you do not provide your tax returns. In this case, you may face a fine of RM200 to RM20,000 or a maximum jail term of six months (under subsection 112 (1) of the Income Tax Act 1967).
  • You might escape prosecution, but the CEO might charge you a penalty based on how much you would have owed for that tax year (this amount does not take into account any tax relief you would have received). The penalty referred to in subsection 112 (3) of the Income Tax Act 1967 is three times the amount owed; however, Operational Directives n ° 5 2019 (GPHDN 5/2019) break it down into three levels.
PeriodPenalty
12 months15%
More than 12 months, up to 24 months30%
More than 24 months45%

What should you do now?

Although the manual submission deadline this year was April 30, you have until May 15 to file your tax returns online. So if you missed the manual filing deadline, you can still do it for online filing with these last minute filing tips. Unfortunately, even if the two deadlines have already passed, you will still have to file your taxes.

Here is how to declare your taxes manually or via e-Filing.

How to avoid missing tax deadlines next year

Don’t you want the same to happen next year? Consider setting a digital calendar reminder that repeats every year. The deadline for income tax is usually April 30 (manual submission) or May 15 (electronic filing), so you can set it at the beginning of April to give yourself more time if something goes wrong. .

If you need additional reminders, you can (excuse our self-promotion) sign up for our newsletter or subscribe to our Facebook and Instagram page. We regularly post income tax information during tax season, so you don’t miss it.

But for some of us, having enough tax reminders isn’t a problem. After all, in tax season, your employer can give you an EA form, news outlets will run stories about tax filing, and your insurance agent can send you a tax return.

The problem is, we tend to put it off … until it’s too late. We understand – tax filing can be a real pain, especially when you have a year of tax receipts to go. On the positive side, there are a few things you can do to make it less painful:

  • Label emails. Create a custom label or folder in your inbox (e.g. Tax 2021). This allows you to tag all the tax documents you receive as soon as they arrive in your inbox.
  • Online storage. If you have a cloud storage subscription (Google Drive, Apple iCloud, Dropbox, etc.), create a folder for your taxes. Anytime you receive a tax document, you can move it to this folder, no matter what device you are using. You can also take photos of your receipts and store digital versions in the cloud.
  • Physical storage. If you need to process physical documents, designate a location to store them. Depending on your needs, this can be as simple as a transparent folder marked with the year.
  • Know your documents. Organizing your documents won’t help you if you don’t know what to organize in the first place. So, familiarize yourself with the type of income you need to report and the relief you are entitled to.

When tax season arrives next year, it will be much easier to complete the form because you will already have most of your paperwork ready.

Don’t be tempted to skip the leaderboard altogether

If the deadline has passed, you might be tempted to skip the deposit entirely. You should not. If you are audited, you could have serious problems.

During an audit, a tax agent would verify all information relating to your income and expenses. You will need to provide evidence to prove that your reported income, claims, relief and reimbursement are correct. If you are found guilty of not filing your taxes, you will be liable to a fine or jail time for tax evasion.

So if you accidentally missed the tax deadline, the best thing to do is to just file as soon as possible. You’ll have to pay extra fees, but it’s better than risking the wrath of the LHDN. Next year you will be better prepared.


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