how to file income tax in Malaysia

How to File Income Tax in Malaysia?

Tax evasion is a serious offence in Malaysia and if a tax payment is late, companies should quickly make a payment before the Inland Revenue Board (IRB) serves you with more than a fine.

While there will be penalties charged, it is better to face up to them rather than waiting for an audit. By coming forward early, it will prevent more serious legal action from being taken against you.

To declare company income, the proper documents must be submitted and in this case, the most important one is Form E. Form E needs to be filed with IRB by companies, enterprises or partnerships no later than 31 March. Failure to do so will see the following penalties:

a. An automatic 10% increment in the tax amount due
b. An additional 5% increment on the balance as stated in (a) if payment is not made in 60 days from the final date given

How you should proceed if for some reason you have not paid your taxes as yet:

  1. First, make sure you have an income tax file and number for your business. If you have not as yet registered your firm with the IRB, do so immediately by going to the nearest IRB branch.
  2. Compile your receipts and other proof of income and payment made by your business entity. Ideally, you should keep your receipts for at least 7 years in case of an audit.
  3. Get a copy of the Form E by either downloading it from the IRB site at gov.my or, if you’re already registered with the IRB, a hard copy will usually be sent to you.e-form
  4. Contact the IRB to explain your situation and negotiate the final date for your payment.
  5. For a quicker estimate of how much you need to pay, you can login to the IRB site.  Filing your taxes online will allow you to have your taxes calculated on the spot by the IRB website.

TIP:

If you have quite a few employees, using Microsoft Excel to tabulate salaries and tax deductions will make the process easier. You can also use Excel to record the amount of tax paid and compare your own calculations to the ones made online.

taxes      6. Pay your taxes either by bank transfer, online or personally making the payment at the nearest IRB office.

Making the effort to make timely payments to the IRB is necessary and the earlier you sort out your taxes, the better. Don’t make the mistake of leaving it till too late as not only will you risk penalties, you might make errors in haste and end up paying more or less than what was due.

Save yourself the hassle and heartache; file your taxes early in future and ensure peace of mind.

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