What are the consequences of tax evasion/underreporting?

What are the consequences of tax evasion/underreporting?

Who needs to file taxes?

Malaysia’s Income Tax Act 1967:

Tax residents are required to file taxes. If you reside in Malaysia for more than 182 days in a year, you are considered a tax resident.

Do you have to pay taxes if you file?

Filing taxes does not necessarily mean you have to pay taxes. You are only required to pay taxes if you have reached the government’s prescribed threshold of total income.

What are the consequences of delaying tax reporting?

Section 112(3) of the Income Tax Act 1967:

The tax authorities can impose a penalty of up to 300% of the tax owed for late filing.

What happens if incorrect tax information is provided?

Section 113(1) of the Income Tax Act 1967:

A maximum penalty of RM20,000 can be imposed on those who provide incorrect tax information, and the tax authorities can impose a penalty of up to 200% of the tax owed.

What are the consequences of tax evasion/underreporting?

Section 114 of the Income Tax Act 1967:

intentional tax evasion can result in a maximum fine of RM20,000, a maximum prison term of 3 years, or both.

In addition, a special penalty of up to three times the amount of tax evaded for each charge may be imposed.

Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA):

Tax evasion money can also be defined as “black money.”

Once identified as black money, using tax evasion money is equivalent to money laundering.

If convicted, a person can be sentenced to imprisonment for up to 15 years and a fine of up to 5 times the amount of illegal proceeds or the instrument of crime, or RM5,000,000, whichever is higher.