With effect from the Year of Assessment (YA) 2014, taxpayers with only employment income and Monthly Tax Deductions (MTD) deducted throughout the year may opt not to submit an income tax return by virtue of Section 77C of the Malaysian Income Tax Act, 1967 (MITA). When taxpayers opt to do so, the total amount of MTDs will be deemed as final tax.
The Inland Revenue Board of Malaysia (IRBM) issued PN 1/2021 – Tax Treatment on Final Tax on 3 May 2021. This new PN is available in Bahasa Malaysia only, under the title “Layanan Cukai Ke Atas Cukai Muktamad”.
A taxpayer satisfies the eligibility criteria and does not furnish the tax return by the stipulated deadline.
A taxpayer does not furnish the tax return (MTDs paid is deemed as final tax) and the IRB obtains new or additional information on the taxpayer’s income.
A taxpayer has opted for the MTDs as final tax but wishes to claim additional tax reliefs or apply for tax refunds.
A taxpayer has opted for MTDs as his final tax. Subsequently, a tax audit is carried out on the employer and a shortfall in MTDs is discovered.
Due to the rise in COVID-19 infections in Malaysia, the Government has decided to implement the MCO 3.0 restrictions from 12 May 2021 to 7 June 2021. Following the MCO that was implemented in selected states from January 2021, the Government has imposed a strict standard operating procedure that no more than 30% of management staff is allowed to operate for all economic sectors.
The Chartered Tax Institute of Malaysia (CTIM) has submitted a letter dated 12 May 2021 to the IRBM to enquire on whether the IRBM would consider extending the grace period for filing of tax returns as well as deferring tax payments for taxpayers who are affected by the MCO 3.0. In addition, the CTIM has also requested the IRBM to consider making e-filing and e-payment facilities available for payment of withholding tax and to allow Form Q to be filed via email.
The IRBM’s Response
The IRBM has responded via a letter dated 19 May 2021 that the affected taxpayers can apply for extension of time (EOT). The IRBM has agreed to give flexible conditions to facilitate applications for EOT as follows:
The Malaysian Income Tax (Country-by-Country Reporting) Rules 2016 (The Rules) P.U.(A) 357/2016 was gazetted on 23 December 2016. The Rules apply to multinationals headquartered in Malaysia, having total group consolidated revenue of more than RM 3 billion in a financial year. The CbCR rules in Malaysia took effect on 1 January 2017.
IRBM’s AnnouncementThe IRBM has issued an announcement on its website on 25 May 2021 whereby starting from the YA 2021, constituent entities can now furnish the Country-by-Country Reporting (CbCR) Notification using the Form C. The salient points highlighted in the announcement are:
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