Clear your backlog or you could face prosecution
TTCS Virtual Sharing Session on Indirect Tax

30 October 2023

IT IS becoming very clear that there are still many taxpayers (individuals, corporates, and other taxable entities) who are refusing to file tax returns.

The latest case brought to court in Johor includes the logistics company called Narita Shipping and Transport Sdn Bhd which allegedly has not filed its tax returns for 2020 and 2021 where the outstanding tax claims amount to RM550,000.

Another similar case relates to Syed Azhar Syed Sahat who allegedly failed to file his returns for the years 2016, 2018, 2019, 2020 and 2021, and there are claims for taxes outstanding amounting to RM129,843.

If they are proven to be guilty, they will have to pay the taxes and they face a potential 300% penalty on the taxes due, and a possibility of facing a jail term not exceeding six months. Despite such frightening consequences, it appears that taxpayers are willing to take the risk and not file tax returns.

There are other consequences. If a taxpayer has been charged in court, there is a possibility that the credit rating agencies will report this, and it will affect their credit standing too.

Why are some taxpayers reluctant to file their returns?

It is possible that the backlog could be due to the fact that the accounts are not finalised due to disputes between shareholders, disagreements with the auditors, family disputes, pending legal matters, or simply because the accounts are not up to date.

It is also possible that there are genuine cases where the accounts cannot be prepared because records do not exist or they have been lost due to flood, fire or other calamities. The tax law does not discriminate between those who intentionally delay and those who are genuinely caught in a bind.

How do you get out of the bind?

If your case is genuine and you are unable to prepare the accounts, it will be best for you approach the Inland Revenue Board (IRB) and explain the situation.

This alone is not enough. You need to get a good tax adviser or an accountant to estimate your income and this can be done by collecting information from your suppliers, customers, and from your banking transactions. It can also be derived from your stock records and expense patterns. There are many ways of estimating your income.

Once you have the estimated figures and you have the basis for calculating the estimated figures, you should submit the information to the IRB and ask them to issue an assessment.

At the moment, you have a golden chance of using such information under the Special Voluntary Disclosure Programme 2.0 (SVDP) to file the tax return without any penalty.

If subsequently you are able to get more information to produce an accurate set of accounts, you can go back to the authorities and ask for your return to be amended. This will only be applicable if there are additional taxes to be paid. In the event the tax is reduced, you will not get the refund. Therefore, you have to be careful in submitting yourself under SVDP.

Any numbers submitted under SVDP should have a basis and they should be explainable to the tax authorities.

Please come out of the woodwork and come clean with the tax authorities. IRB is here to help you. If you do not want to use a tax consultant or an accountant, IRB has customer service representatives at all branches, and they will help you.

This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (

This article was originally published on the Sun daily.

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