(Tax Update) Understanding the Importance of Complying with IRB Requests for Tax Information and Documents in Malaysia

Understanding the Importance of Complying with IRB Requests for Tax Information and Documents in Malaysia

If you have received the notice/letter under Section 81 of the Income Tax Act 1967, it is compulsory to submit the information to LHDNM within 30 days from the date of the notice/letter.

We strongly advise against ignoring any request for tax information and documents from the Inland Revenue Board (IRB) of Malaysia. Such requests are not merely formalities but are a critical aspect of the tax administration process. Here’s what you need to know about these requests and the implications of non-compliance.

What is an IRB Request for Information?

The IRB is responsible for tax collection and ensuring compliance with tax laws. When they issue a request for information, it typically involves asking taxpayers to provide specific documents or details to verify their tax submissions. This can include income statements, receipts, or documentation related to deductions and exemptions.

Legal Obligations

Taxpayers are legally obligated to respond to these requests. The Malaysian Income Tax Act 1967 mandates that taxpayers provide accurate and complete information to the IRB. Failure to comply can be seen as an offense under the tax laws.

Consequences of Non-Compliance

Ignoring a request from the IRB can lead to severe consequences, including:

  • Penalties and Fines: The IRB can impose substantial fines and penalties for non-compliance, which might exceed the amount of tax due.

  • Audits and Investigations: Non-compliance can trigger a more thorough audit of your financial affairs. An audit can be intrusive, time-consuming, and stressful.

  • Legal Action: In extreme cases, the IRB can initiate legal action against individuals or entities that fail to comply with their requests. This can result in criminal charges and potential conviction.

Best Practices for Responding

  • Timely Response: Always respond within the timeframe specified in the request. If you need more time, communicate this to the IRB immediately and request an extension.

  • Accuracy and Completeness: Ensure that all information and documents provided are accurate and complete. Any discrepancies can lead to further scrutiny.

  • Seek Professional Help: If the request is complex or you are unsure about the information required, consider consulting a tax professional. This ensures that you are providing the correct information and mitigates the risk of errors.

Conclusion

While it might be tempting to ignore requests from the IRB hoping they might go away, such an approach can lead to significant legal and financial troubles. It’s crucial to treat these requests with the seriousness they deserve and respond appropriately.

Always remember that maintaining compliance is not just about adhering to legal requirements; it's about contributing responsibly to the nation's fiscal health and integrity.

Past Blog on IRB Profiling Information System (previously known as Information Collection Program)

IRBM Information Collection Program dated 26 May 2022 https://www.ktp.com.my/blog/irbm-information-collection-program/26may2022

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