Stoppage Order Malaysia

Are you plan to travel overseas for a holiday or business trip abroad? If yes, have you checked the Immigration website for your travel restriction? Why?

The LHDNM has the authority to issue the stoppage order certificate to a Commissioner of Police or a Director of Immigration to prevent you from leaving Malaysia if you fail to pay all taxes to the LHDNM.

Key Takeaways

You will understand:

1. What is a Stoppage order?

2. What is the tax liability?

3. Who is responsible for the tax liability?

4. What conditions allow taxpayers to leave without full payment of tax liability excluding foreign nationals?

5. What are the consequences if fail to comply?

6. What is the responsibility of the taxpayer?

7. Where to check the travel restriction status?

Summary of Learning

1. What is a Stoppage order?

A stoppage order is an order issued by Director General (DG) to prevent a taxpayer from leaving Malaysia if he fails to pay all the tax liabilities.

2. What is the tax liability?

(i) All tax payable is due and payable;

(ii) All sums payable due by a taxpayer in relation to an increase in tax charged for

Late payment of tax;
Late payment of tax installment;
Late payment of estimate tax installment; or
Notice of Installment payment (CP205) issued by LHDNM when failing to submit the prescribed form.

(iii) All debts payable by taxpayer on withholding tax included：-

Contract payment;
Interest and royalties;
Special classes of income; or
Miscellaneous income.

3. Who is responsible for the tax liability?

Individual or a Company director.
The meaning of Company director:

o The person who is involved in the management of the company’s business; and

o Holds at least 20% of company’s ordinary shares; or

o Directly or indirectly through other companies holds at least 20% of company’s ordinary share

4. What conditions allow taxpayers to leave without full payment of tax liability excluding foreign nationals?

Make at least 50% of the payment (or a rate as determined by LHDNM) of the total claim in the certificate issued.
Proof of documentary such as payment made in cash or bank draft to enable a letter for a temporary release certificate.
Arrange the schedule of installment payments on the balance of tax due.

A taxpayer who fails to comply with the schedule of installment payments is not eligible to be considered for a subsequent application for a temporary release letter.

5. What are the consequences if fail to comply?

Taxpayers who voluntarily or attempt to leave Malaysia without settlement of debt, he/she will be liable to: -

a fine of not less than RM200.00 and not more than RM20,000;
imprisonment for a period not exceeding six (6) months; or
both.

A police officer or an immigration officer may arrest, without a warrant, any person whom he reasonably suspects of committing or is about to commit an offence by not complying with a certificate issued under Section 104 of the Income Tax Act.

6. What is the responsibility of the taxpayer?

To check and settle the tax and debt before leaving.
To inform the change of the correspondence address to the IRBM branch who handles the income tax file (if any).

7. Where to check the travel restriction status?

The taxpayer can check the travel restriction status on the official website of the Immigration Department of Malaysia (IDM) at www.imi.gov.my or contact the IRBM call center.

Sources:

Public Ruling 4/2022 - Recovery From Persons Leaving Malaysia

https://www.hasil.gov.my/media/mmcpirll/public-ruling-no-4_2022-recovery-from-persons-leaving-malaysia.pdf

This article is jointly authored by Ms. Ong Xin Ying, Ms. Liu Shi Lee and Ms. Teo Mei Qi with guidance and mentoring from our Assistant Manager Ms. Chong Chee Ling and Ms. Yew Jia Chong from KTP Group of Companies.

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