Malaysia: IRBM proposes to impose 100% penalty for undeclared income and incorrect information

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The Malaysian Inland Revenue Board (MIRB) published a media statement on 16 May 2017 regarding clarification of imposing 100% penalty for failure to declare income and correct information which will be implemented with effect from 1 January 2018.

Under the Income Tax Act 1967, the Director General of Inland Revenue is given the power to impose a penalty for the offence of default in declaring income or in declaring correct income which is subject to tax. The proposal to increase the rate of penalty to 100% of the tax payable on the undeclared or under declared income beginning 1 January 2018 is a step towards elevating the level of voluntary compliance among tax payers by dealing with tax payers who are hardcore tax law defaulters.

Examples of cases that would be subject to the 100% penalty are repeated offences of undeclared or incorrectly declared income received by way of a return form; refusal to give full co-operation during an audit or investigation process; failure to give information or documents requested to assist in an audit or investigation process; carrying out an organised tax evasion scheme or failure to comply with the tax law even though the tax payer has been audited or investigated before.

In preparation, tax payers are encouraged to come forward and declare their income and correct information within the required time.

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