A total of 186,346 individuals have reportedly been blacklisted from international travel for failing to pay income tax, real estate tax or corporate tax involving RM12.9 billion as of July 2022.
The Inland Revenue Board (LHDN) has the power to prevent individuals from leaving the country if they have failed to pay taxes to the government under Section 104 and 75A of the Income Tax Act (ACP) 1967 and Section 22 of the Real Property Gains Tax Act (ACKHT) 1976, Director of the CEO’s Office at LHDN Ranjeet Kaur told Utusan Malaysia in comments published today.
“This course of action can be imposed on the directors of any company that attempt to leave Malaysia without paying company tax that they are responsible for under Section 75A of the ACP 1967 or subparagraph 5(1A) and 5(4) Schedule 1 of the ACKHT 1967,” she was quoted as saying.
She reportedly added that foreigners who might attempt to exit the country without paying their taxes may also face being blocked from international travel.
Taxpayers who file Form Q, the appeal form, and make an application for a judicial review may also face restricted travel except in cases where a stay of proceedings order is issued by a court that has jurisdiction over the matter, she reportedly said.
It was also reported that tax collection through the court can be done immediately if the taxpayer fails to pay the installments on the set due date.
Ranjeet reportedly went on to say that travel restrictions will not be enforced against taxpayers who have not been subject to travel restrictions and have been authorised to pay in installments, while they comply with the agreed installment schedule.
Notice of travel restrictions will be sent to the taxpayer’s last updated address through the latest recorded tax data and via registered email, she reportedly said.
“Therefore, taxpayers are advised to check through https://sspi.imi.gov.my before going abroad besides checking through the e-ledger found on MyTax at https://mytax.hasil.gov.my.
“This will help taxpayers in preventing issues with immigration at the country’s exit points,” she was quoted as saying.
However, if the taxpayer continues to fail to make payment, actions other than restriction of travel that reportedly can be taken include Wage Deduction Order (CP38), caveats, the appointment of an agent, an order to the officer in charge to collect the payment owed and court action.
Non-compliance and tax evasion is reportedly criminalised under Sections 112, 113 and 114 of the ACP 1967 and individuals who are found guilty of tax evasion or helping another person evade taxes can be fined RM1,000 to RM20,000 or imprisoned for not more than three years or both as well as 300 per cent of the underreported tax.
But if a taxpayer succeeds in paying off the full amount of tax arrears, they must let LHDN know to process the cancellation of the travel restriction, Ranjeet reportedly added.
She reportedly said that as proof, LHDN will prepare a letter of cancelation for the reference of the taxpayer once payment of tax arrears is received.
As for the case of the taxpayer who is held at any of the country’s exit points, LHDN will process a cancelation or temporary relief from the travel restriction immediately after receiving proof of payment from the taxpayer, she reportedly said.
“In order to raise awareness about this issue, LHDN has launched an awareness campaign on various media platforms and social media to educate people about tax payments and advising taxpayers who are planning trips abroad to check their tax status first,” she was quoted as saying.