Do you know IRBM will pay taxpayer 2% "compensation" on your overpayment of tax?

Do you know IRBM will pay taxpayer 2% "compensation" on your overpayment of tax?

Do you know IRBM will pay taxpayer 2% "compensation" on your overpayment of tax?

Do you know IRBM will pay taxpayers 2% "compensation" on your overpayment of tax?

Operational Guideline Updates: Compensation on Late Refund of Overpayment of Tax

– updated on 21 May 2021 by IRB

What is this operational guideline about?

- This guideline is to give clarification on payment of compensation for late refund of overpayment of tax made by IRB.

- Under Section 111D of the Income Tax Act 1967 (ITA).

What are the criteria for compensation?

1. Submit income tax return form (ITRF) before deadline

o Income tax return form must be submitted on-time, complete and correct.

o On time = within the deadline stated below or within the extended deadline approved by IRB.

  • Individual with employment income…Before 30 April

  • Individual with business income….Before 30 June

  • Company/Limited Liability Partnership/Society….Within 7 months from the date following the close of the accounting period of the business

2. Type of tax payment eligible for tax refund

o Only the following type of payment will get tax refund:

a. PCB: Monthly tax deduction

b. CP500: Installment Payment Notice

c. CP204/CP205: Estimated Tax Payable by Companies/Limited Liability Partnership/Society

3. Timelines of calculation of compensation

o The compensation is calculated on a daily basis, starting from the first day after the period stated as below:

  • via E-filling: After 90 days from submission deadline

  • via post/courier: After 120 days from submission deadline

How to calculate?

● Compensation of 2% shall be paid in accordance with the following formula:

● =𝑻𝒂𝒙 𝒓𝒆𝒇𝒖𝒏𝒅 ×𝑻𝒐𝒕𝒂𝒍 𝒏𝒐.𝒐𝒇 𝒅𝒂𝒚𝒔 𝒍𝒂𝒕𝒆 𝟑𝟔𝟓/𝟑𝟔𝟔 𝒅𝒂𝒚𝒔 × 2%

Taxpayers who are not eligible to be paid compensation

1. Tax return submitted after the due date in accordance with the ITA.

2. Tax set off under Section 110 of the ITA is in excess of tax payable.

3. Assessment raised by IRB under Sections 90(3), 91, 91A, 92 and 96A of the ITA.

4. Taxpayer applied for extension of time for submission of tax return.

5. There's an appeal against the assessment.

6. There is additional tax payable from IRB audit during the 90 or 120 days from submission deadline.

7. The excess tax paid are not from instalment payments under Sections 107, 107B and 107C of the ITA.

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