Guide On Labuan Personal Tax Compliance
All foreigners who have existing Personal Tax File (SG No) opened is required to lodge their personal tax returns (Form BE), regardless if there is income or no income received from the Labuan company or any source derived from Malaysia. If there is no income received, the return may indicate “0” (zero) income. Personal tax returns must be done annually until the file is duly closed. As such, we strongly advise all foreigners to close their tax file once they have resigned from the company or decided to leave the country. This is to avoid any penalty imposed for non-compliance by Inland Revenue Board (IRB).
[Read: Guide to Monthly Tax Deduction for Labuan Expatriates]
The deadline for personal tax filing is by April 30th annually and the Inland Revenue Board will accept submissions starting from March 1st each year. For those filling online, the deadline is on 15th May.
There are four (4) types of common offenses and penalties by Malaysia Inland Revenue Board when it comes to personal tax:
A. Failure to furnish returns or give notice of chargeability
Fine: RM200 to RM2,000 or imprisonment for a term not exceeding six months or both.
B. Incorrect or falsification of returns
Fine: RM1,000 to RM10,000. You shall also pay a special penalty of double the amount of tax which was undercharged due to the incorrect information.
If no prosecution has been instituted, the Director-General may require you to pay a penalty equal to the amount of tax which was undercharged.
C. Willful evasion
Fine: RM1,000 to RM20,000 or imprisonment for a term not exceeding three years or both. You will also need to pay triple (3x) the amount of tax which has been undercharged.
D. Leaving Malaysia without payment of tax
Fine: RM200 to RM20,000 or imprisonment for a term not exceeding six months or both.
E. Failure to keep records, receipts and documents that are related to your chargeable income and tax payable.
Fine: RM300 to RM10,000 or imprisonment for a term not exceeding one year or both.
It is advisable to close your personal tax file when you decide to leave Malaysia for good. This is to avoid any penalties and future complications that may arise at the Immigration Check Points during your next visit to Malaysia. To close your SG File, prior to applying to Malaysia Inland Board (IRB) with your Resignation Letter to the Company, you need to update all your tax record. IRB is ready to close the file if there are no outstanding unpaid taxes and all previous records are updated.
For more details of the offenses, please visit IRB website (Part VII – Offences and Penalties).
Feel free to drop us an email at firstname.lastname@example.org should you have issues on your personal tax filing. We “simplify the complexities” of your personal tax matters!