Volume 4 Issue 2 1 March 2016

Tax amnesty
2016
Reduction and waiver of
tax penalties

Reduction and waiver of tax penalties

The 2016 Budget recalibration measures* include a proposal for the relaxation
of penalties for voluntary disclosure and settlement of tax arrears.

@ow can this benet you7

Waiver of tax increase (late payment penalty) for
tax arrears: income tax, petroleum income tax,
withholding tax and RPGT**

Reduction of penalty for voluntary disclosure of

non%submission or late ling of income tax and
petroleum income tax forms, and RPGT forms

Reduction of penalty for voluntary disclosure

of incorrect returns led

Reduction of penalty for audit and investigation cases

Reduction of penalty for voluntary disclosure

and settlement of late stamping

Notes:
* These measures were announced by Malaysias Prime Minister and Finance Minister, YAB Dato Sri Mohd Najib bin Tun Abdul Razak,
on 28 January 2016.
** RPGT denotes Real Property Gains Tax
Source:
Inland Revenue Boards media release on Reduction of Penalty For Voluntary Disclosure And Waiver of Tax Increase For The Settlement
Of Tax Arrears dated 10 February 2016
Take 5: Tax amnesty 2016

The Malaysian Inland Revenue Board (IRB) has followed through to announce that
there will be a reduction of penalties and waiver of tax increases to encourage
voluntary disclosures and early settlement of tax arrears (the Amnesty)*.

Multinational, foreign and local companies**

Foreign and local individuals**

(including high net worth individuals)

Taxpayers with unresolved tax issues with the IRB

Who
can
apply?

Taxpayers currently under civil suit, tax audit or

investigation by the IRB
Others**
(including body of persons, limited liability
partnerships, corporation sole, trust bodies)

Key areas to note

Merit based

Tax audit

Open years

Documentation

Limited time frame

Depends on the
IRBs discretion
based on the
merits of the case

Possibility of
triggering a tax
audit by the IRB

Not clear on
the years of
assessment to
be audited by
the IRB

The IRB may call

for historical
documents

1 March 2016
to
15 December 2016

Notes:
* The tax amnesty for indirect taxes will be covered in the next issue of EYs Take 5
** Taxpayers deriving income from Malaysia who are looking for opportunities to regularize their tax positions
Take 5: Tax amnesty 2016

Current tax penalty and the Amnesty regime

Set out below are the current penalty regime under the tax law, the
concessionary rates applied by the IRB in practice and the reduced penalty
rates under the Amnesty regime.
1) Penalty rates
Penalty regime
Income Tax Act 1967
Petroleum (Income Tax)
Act 1967

Penalty rates
based on the
tax law

Penalty rates
(Concessionary rate)

Reduced penalty rates

(Amnesty regime*)

Failure to furnish tax returns

by the statutory due date
(income tax)

Up to 300%

x period from the statutory due date

for furnishing the tax return**:
Within 12 months: 20%
After 12 months to 24 months: 25%
After 24 months to 36 months: 30%
Beyond 36 months: 35%

Full payment: 15%

Payment in 6 instalments: 20%

Failure to furnish tax returns

by the statutory due date
(petroleum income tax)

Up to 300%

No concessionary rate specied in any

guidelines issued by the IRB

Full payment: 15%

Payment in 6 instalments: 20%

Incorrect returns: Voluntary

disclosure (within a
stipulated period) after
taxpayer has been informed
of the tax audit

Up to 100%

35%***

Full payment: 25%

Payment in 6 instalments: 35%

Incorrect returns: Voluntary

disclosure by taxpayer
during a tax investigation

Up to 100%

From 45% to 100%***

Voluntary disclosure within 14

days from the date of the IRB
inspection:
Full payment: 20%
Initial payment of 50% and
remaining in 6 instalments: 25%

Incorrect returns: Voluntary

disclosure

Within x period from the statutory due date for

furnishing the tax return***:
Within 60 days: 10%
After 60 days to 6 months: 15.5%

Full payment: 15%

Payment in 6 instalments: 20%

Up to 100%

x period from the statutory due date

for furnishing the tax return:
After 6 months to 1 year: 20%
After 1 year to 3 years: 25%
Beyond 3 years: 30%

Incorrect returns: Discovery

by the IRB during a tax audit

Up to 100%

45% or 100%****

Full payment: 25%

Payment in 6 instalments: 35%

Incorrect returns: Discovery

by the IRB during a tax
investigation

Up to 100%

From 45% to 100%***

Full payment: 25%

Initial payment of 50% and
remaining in 6 instalments: 35%
Applicable to:
Unresolved cases as of 31
December 2015: Settlement by
31 July 2016
Taxpayers who were subject
to tax investigation from 1
January 2016: Settlement by
15 December 2016

Fgl]k29ddl`]h]fYdla]kYZgn]j]][ll`]hgkalagfo`]j]fghjgk][mlagfakafalaYl]\&
*

Based on the Garis Panduan Operasi Bil 1 Tahun 2016 Tawaran Pengurangan Penalti Dan Penghapusan Kenaikan Cukai issued
by the IRB on 10 February 2016

**

Based on the Garis Panduan Operasi Bil 1 Tahun 2015 Pengenaan Penalti Di Bawah Subseksyen 112(3) Akta Cukai Pendapatan
1967 issued by the IRB on 5 March 2015

*** Based on the Petroleum Tax Audit Framework, the Tax Investigation Framework and the Tax Audit Framework issued by the IRB on
1 April 2013, 1 October 2013 and 1 February 2015 respectively
**** The penalty rate for taxpayers who are listed in the Monitoring Deliberate Tax Defaulter Programme is 100%

Take 5: Tax amnesty 2016

1) Penalty rates (contd)

Penalty regime
Real Property Gains Tax Act 1976
Stamp Act 1949

Penalty rates based on the

tax law

Reduced penalty rates

(Amnesty regime*)

Failure to furnish RPGT form by the stipulated

due date

Up to 300%

Full payment: 5%
Payment in 6 instalments: 8%

Failure to present an instrument for stamping

within the stipulated period

x period from the stipulated due

date for presenting an instrument
for stamping (whichever is
greater):
Within 3 months: RM25 or 5%
After 3 months to 6 months:
RM50 or 10%
Beyond 6 months: RM100 or
20%

Stamping of the instrument and

payment of stamp duty made:
From 1 March 2016 to 30 June
2016: 5%
From 1 July 2016 to 15
December 2016: 10%

Rate of tax increase

(based on the Income Tax
Act 1967, unless otherwise
indicated below)

Waiver of tax increase

(Amnesty regime*)

Income tax payable

After the due date: 10%

Beyond 60 days after the due
date: Additional 5%

Fully waived

Estimated tax payable by instalments

(by a company, limited liability partnership, trust
body or co-operative society)

After the due date: 10%

Fully waived

Under-estimation of tax payable by a company,

limited liability partnership, trust body or cooperative society
(where the tax payable exceeds the original,
revised or deemed revised estimate of tax
payable, whichever is later, by an amount more
than 30% of the tax payable)

10%

Amount to be waived is not

indicated

Payment by instalments
(other than a company, limited liability
partnership, trust body or co-operative society)

After the due date: 10%

Fully waived

Shortfall of instalments payable by persons other

than a company, limited liability partnership,
trust body or co-operative society (where the tax
payable exceeds the total instalments payable by
an amount more than 30% of the tax payable)

10%

Amount to be waived is not

indicated

Withholding tax payable

After the due date: 10%

Late payment of withholding tax:

50% penalty waiver
Discovery during tax audit: Fully
waived
Voluntary payment of unpaid
withholding tax: Fully waived

Petroleum income tax payable

After the due date: 10%

(Petroleum (Income Tax) Act
1967)

Fully waived

Real Property Gains Tax

Disposer
Acquirer (remittance of retention sum to the
IRB)

After the due date: 10%

(Real Property Gains Tax Act
1976)

Fully waived

2) Rate of tax increase

Fgl]k29ddl`]h]fYdla]kYZgn]j]][ll`]hgkalagfo`]j]fghjgk][mlagfakafalaYl]\&
*

Based on the Garis Panduan Operasi Bil 1 Tahun 2016 Tawaran Pengurangan Penalti Dan Penghapusan Kenaikan Cukai issued
by the IRB on 10 February 2016

Take 5: Tax amnesty 2016

Considerations

Before approaching IRB:

Ascertain any unpaid taxes

Undertake a tax health check

Undertake a withholding
tax review on amounts paid
or credited to non-residents

Review your personal net

worth against income reported

Formulate a submission strategy

Take 5: Tax amnesty 2016

Sharing EY knowledge and insights

The outlook for global

tax policy in 2015

Indirect tax in 2015

Global Tax Policy and

;ontroversy Brieng 2015

You and the Taxman

10th anniversary
commemorative edition

Tax Insights Issue 13

Take 5 - Malaysia
principal hub incentive

Take 5 - Tax amnesty

Take 5 - Budget
2016 Malaysia

Take 5 - Recalibration
of Budget 2016

Take 5: Tax amnesty 2016

EY | Assurance | Tax | Transactions | Advisory

About EY
EY is a global leader in assurance, tax, transaction and advisory services.
The insights and iuality services we deliver help build trust and condence
in the capital markets and in economies the world over. We develop
outstanding leaders who team to deliver on our promises to all of our
stakeholders. In so doing, we play a critical role in building a better working
world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the
member rms of Ernst  Young Global Dimited, each of which is a separate
legal entity. Ernst  Young Global Dimited, a UC company limited by
guarantee, does not provide services to clients. For more information about
our organization, please visit ey.com.
2016 Ernst  Young Tax ;onsultants Sdn. Bhd.
All Rights Reserved.
APAC no. 07000621
ED None
This material has been prepared for general informational purposes only and is not intended to
be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for
specic advice.

ey.com/my

Contacts
Yeo Eng Ping
Tax Leader,
Ernst & Young Tax Consultants Sdn. Bhd.
Asean Tax Leader, EY

Lim Kah Fan

Partner, Business Tax Services
Ernst & Young Tax Consultants Sdn. Bhd.

Amarjeet Singh
Partner, Business Tax Services
Ernst & Young Tax Consultants Sdn. Bhd.

Farah Rosley
Partner, Business Tax Services
Ernst & Young Tax Consultants Sdn. Bhd.

+603 7495 8383

amarjeet.singh@my.ey.com

+603 7495 8254

farah.rosley@my.ey.com

Chow Seong Chen

Executive Director, Business Tax Services
Ernst & Young Tax Consultants Sdn. Bhd.

Chan Vai Fong

Director, Business Tax Services
Ernst & Young Tax Consultants Sdn. Bhd.

+603 7495 8288

eng-ping.yeo@my.ey.com

+603 7495 8201

seong-chen.chow@my.ey.com

For further information about EY or our thought leadership, please visit:

Website: ooo&]q&[ge'eq
Mobile app: EY Insights (available on iOS and Android devices)

+603 7495 8218

kah-fan.lim@my.ey.com

+603 7495 8317

vai-fong.chan@my.ey.com