# Malaysian Tax Penalties and Offences Reference

> Offence, statute, penalty range and typical concession across the Income Tax Act 1967, the Sales Tax Act 2018, the Service Tax Act 2018, the Stamp Act 1949 and the Real Property Gains Tax Act 1976.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/tax-penalties

---

There is no single Malaysian tax penalty scale. Five statutes each run their own
architecture, and the same commercial mistake can cost 10% under one and 2,000%
under another. Understating service tax by RM50,000 is a fine of **RM500,000 to
RM1,000,000** on a first evasion conviction under s.71(2)(a) of the Service Tax
Act 2018. Understating income tax by the same amount is a penalty **equal to the
tax** under s.113(2), concessionally applied at 15% for a first offence.

Every row below is read off the statute. Where a rate is applied by policy
rather than by statute, that is stated.

## The pattern to read the tables with

Nearly every provision here comes in **two limbs**: a court **fine** on
conviction, and an administrative **penalty** the Director General or Collector
may impose *where no prosecution has been instituted* — and paying the penalty
bars prosecution on the same facts. Almost all real cases settle on the second
limb. Increases under ITA ss.103 and 107C are a third category: neither fine nor
penalty, but a sum recoverable **as if it were tax**.

## Income Tax Act 1967

| Failure | Section | Fine on conviction | Administrative penalty |
| --- | --- | --- | --- |
| Failure to furnish a return, or to give notice of chargeability | **s.112(1)** | RM200 – RM20,000 / ≤6 months / both | — |
| Failure to furnish a return for **two years or more** | **s.112(1A)** | RM1,000 – RM20,000 / ≤6 months / both **and** special penalty of **treble** the tax | — |
| Same failure, no prosecution | **s.112(3)** | — | **Treble the tax** payable for that year |
| Incorrect return or incorrect information | **s.113(1)** | RM1,000 – RM10,000 **and** special penalty of **double** the tax undercharged | — |
| Same, no prosecution | **s.113(2)** | — | **Equal to the tax undercharged** (up to 100%) |
| Failure to furnish contemporaneous transfer pricing documentation | **s.113B(1)** | RM20,000 – RM100,000 / ≤6 months / both | **s.113B(4)**: RM20,000 – RM100,000 |
| Wilful evasion | **s.114(1)** | RM1,000 – RM20,000 / ≤3 years / both **and** special penalty of **treble** the tax | — |
| Assisting or advising leading to an understatement | **s.114(1A)** | RM2,000 – RM20,000 / ≤3 years / both | — |
| Leaving Malaysia after a s.104 certificate | **s.115(1)** | RM200 – RM20,000 / ≤6 months / both | — |
| Obstructing an LHDN officer | **s.116** | RM1,000 – RM10,000 / ≤1 year / both | — |
| Failure to keep records under s.82 | **s.119A** | RM300 – RM10,000 / ≤1 year / both | — |
| Failure to comply with a notice, to file Form E, to give a CP21 / CP22 / CP22A notice, or to furnish a CP204 estimate | **s.120(1)** | RM200 – RM20,000 / ≤6 months / both | — |
| Country-by-country report not furnished | **s.112A(1)** | RM20,000 – RM100,000 / ≤6 months / both | — |

**Increases, which are not offences at all:**

| Trigger | Section | Increase |
| --- | --- | --- |
| Tax unpaid by the statutory due date | **s.103(3)** | **10%** of the unpaid tax |
| Tax unpaid 30 days after service of a notice of assessment | **s.103(5)** | **10%** of the unpaid tax |
| Default on an approved instalment | **s.103(7)** | **10%** of the outstanding balance |
| CP204 instalment unpaid by the due date | **s.107C(9)** | **10%** of the amount unpaid |
| Final tax exceeds the estimate by more than 30% | **s.107C(10)** | **10%** of the excess **over** the 30% margin |
| No estimate furnished at all | **s.107C(10A)** | **10%** of the **whole** tax payable |
| Transfer pricing adjustment | **s.140A(3C)** | surcharge of **up to 5%** of the increase in income or reduction in deduction or loss |
| Failure to remit withholding tax | ss.107A(2), 109(2), 109B(2), 109F(2) | **10%** of the amount not paid, as a debt due |

> **The 10% plus 5% cascade no longer exists for income tax.** Subsections
> 103(4), (6) and (8), which carried the further increase, were **deleted by the
> Finance Act 2019 (Act 823)**, and LHDN's own penalties page shows 10% only
> "mulai 1 Januari 2020". Guidance still printing 10% + 5% is describing
> repealed law. The 10%-only rule was always the position in RPGT.

**Concessions.** The Director General may abate or remit a penalty under
**s.124(3)**, and remit an increase for good cause under **s.103(9)** or
**s.107C(11)**. The published concession most people will meet is in the
*Rangka Kerja Audit Cukai Pendapatan dan Majikan* (15 March 2025), which applies
s.113(2) at **15% / 30% / 45%** by offence count, **0%** for a technical
adjustment and **100%** for fraud or wilful default, with voluntary disclosure at
**15%** — see [surviving an LHDN tax audit](/en/taxation/tax-audit).

## Sales Tax Act 2018 and Service Tax Act 2018

The two Acts are drafted in parallel, so one table serves both.

| Failure | Sales Tax Act 806 | Service Tax Act 807 | Consequence |
| --- | --- | --- | --- |
| Failure to apply for registration | s.13(5) | s.13(5) | An offence with no express penalty, so the **general penalty** applies: fine ≤**RM30,000** / ≤2 years / both (s.94 / s.79) |
| Late or incorrect return | s.26(7) | s.26(6) | Fine ≤**RM50,000** / ≤3 years / both |
| Failure to pay tax due | s.26(8) | s.26(7) | Fine ≤**RM50,000** / ≤3 years / both |
| Late payment, no prosecution | **s.26(9)** | **s.26(8)** | **10%** for the first 30-day period, **+15%** for the second, **+15%** for the third — **40% maximum** |
| Imported taxable services not accounted for | — | **s.26A(2) and (4)** | Fine ≤RM50,000 / ≤3 years / both; late payment on the same **10-15-15** scale under s.26A(3) |
| Evasion, first offence | **s.86(2)(a)** | **s.71(2)(a)** | Fine of **10 to 20 times** the tax / ≤5 years / both |
| Evasion, second or subsequent | s.86(2)(b) | s.71(2)(b) | Fine of **20 to 40 times** the tax / ≤7 years / both |
| Evasion where the tax cannot be ascertained | s.86(3) | s.71(3) | **RM50,000 – RM500,000** / ≤7 years / both |
| Assisting or advising, leading to an understatement | s.86(4) | s.71(4) | RM2,000 – RM20,000 / ≤3 years / both |
| Any offence with no express penalty | **s.94** | **s.79** | Fine ≤RM30,000 / ≤2 years / both |

**Concession:** an offence prescribed as compoundable may be compounded before
charge at up to **50% of the maximum fine** (s.95(2) sales, s.80(2) service).

**Time bar:** RMCD may assess within **six years** of the tax becoming due, and
**at any time** in cases of fraud or wilful default (s.27(3) of each Act).

## Stamp Act 1949

Read the Act together with the Finance Act 2024 (Act 862) and the Measures for
the Collection, Administration and Enforcement of Tax Act 2024 (Act 863) — no
consolidated official text exists, and the reprints still print superseded
provisions.

| Failure | Section | Penalty | In force |
| --- | --- | --- | --- |
| Late stamping | **s.47A(1)(a)** | **RM50 or 10%** of the deficient duty, whichever is greater, if stamped within **3 months** after the time for stamping | 1 Jan 2025 |
| Late stamping, later than that | **s.47A(1)(b)** | **RM100 or 20%** of the deficient duty, whichever is greater | 1 Jan 2025 |
| Authorised person failing to frank within 30 days of execution | s.60A | RM200 – RM2,000 | — |
| Executing an instrument not setting out all the facts, with intent to evade | s.61 | fine ≤RM2,500 | — |
| Fraud with intent to defraud the Government of duty | **s.74** | **RM1,000 – RM20,000** | 1 Jan 2025 (Act 863 s.40) |
| Failure to keep records or notify under ss.9(7), 15(6A), 15A(6) or 35B | **s.72B** | fine ≤**RM10,000** | 1 Jan 2026 |
| Failure to furnish a return with a chargeable instrument (s.35A) | **s.72C(1)** | fine ≤**RM10,000**; or, no prosecution, a penalty of **RM200 – RM2,000** under s.72C(3) | 1 Jan 2026 |
| Incorrect return under self-assessment | **s.72D(1)** | RM1,000 – RM10,000 **and** special penalty **equal to the duty undercharged**; or, no prosecution, a penalty **equal to the duty undercharged** under s.72D(2) | 1 Jan 2026 |

> **The three-tier late-stamping scale is gone.** Section 26 of Act 862
> substituted a new s.47A(1) with **two** tiers from **1 January 2025**. The old
> RM25-or-5% first band no longer exists, and the hosted copies of the Stamp Act
> on both AGC and LHDN still print it.

**Concession:** s.47A(2) lets the Collector reduce or remit the late-stamping
penalty; ss.72C(4) and 72D(3) do the same for the self-assessment penalties.

## Real Property Gains Tax Act 1976

| Failure | Section | Fine on conviction | Administrative penalty |
| --- | --- | --- | --- |
| Failure to make a return under s.13(1) or a declaration under s.13(5) | **s.29(1)** | fine ≤RM5,000 / ≤12 months / both | — |
| Same, no prosecution | **s.29(3)(a)** | — | **Treble the tax** payable for that year |
| Incorrect return or incorrect information | **s.30(1)** | fine ≤RM5,000 **and** special penalty of **double** the tax undercharged | **s.30(2)**: penalty **equal to** the tax undercharged |
| Wilful evasion | **s.31(1)** | fine ≤RM10,000 / ≤3 years / both **and** special penalty of **treble** the tax | — |
| Leaving Malaysia after a s.22 certificate | **s.32(1)** | fine ≤RM5,000 / ≤2 years | — |
| Tax unpaid within the statutory period | **s.21(4)** | — | **10%** increase, flat |
| Acquirer fails to remit the retention sum within 60 days | **s.21B(2)** | — | **10%** increase, a debt due from the acquirer |

> **RPGT late payment is 10% and stops there.** Section 21(4) was substituted by
> s.22 of the Finance Act 2024 with effect from **1 January 2025** and now bites
> either 30 days after service of a notice, or on expiry of the **90 days from
> the date of disposal** under the self-assessment regime. There is no second
> tier. The 10%-plus-5% cascade some guides import from income tax was never
> RPGT law, and is no longer income tax law either.

**Concession:** s.40(3) allows abatement or remission of a penalty; the proviso
to s.21(4) allows remission of the increase, and reduces it proportionately if
the tax is reduced on appeal.

## Common mistakes

**Quoting RM50,000 for failing to register for SST.** Section 13(5) of each Act
creates the offence but prescribes no penalty, so the route is the **general
penalty** — RM30,000 and two years, not RM50,000.

**Treating 100% as the s.113(2) rate.** The statute permits a penalty equal to
the tax undercharged; the 2025 audit framework applies 15%, 30% or 45% in
practice, and 0% for a technical adjustment.

**Reading s.107C(10) as 10% of the shortfall.** It is 10% of the amount by which
the shortfall **exceeds** the 30% margin. Section 107C(10A), where no estimate
was filed at all, is 10% of the whole tax — usually the larger number.

**Assuming a penalty and a fine cannot both apply.** They can stack across
regimes: unremitted withholding tax attracts the 10% increase in the charging
section *and* a separate s.113(2) penalty via the proviso to s.39(1) — see
[withholding tax non-compliance](/en/taxation/withholding-tax-non-compliance).

**Using a Stamp Act reprint on its own.** Current stamp duty law is the Act plus
Acts 862, 863 and 874. The reprints print the repealed three-tier s.47A.

## What's next

Identify which statute the failure sits under before pricing it — the same
commercial event can touch income tax, SST and stamp duty with three unrelated
consequences.

Where the exposure is an administrative penalty rather than a fine, the
remission provisions are the negotiation: s.124(3) and s.103(9) for income tax,
s.47A(2) for stamp duty, s.40(3) for RPGT, and compounding at up to 50% of the
maximum fine for SST.

Where the penalty has already been imposed in a notice of assessment, the appeal
clock is running — see [appealing an LHDN tax assessment](/en/taxation/tax-appeal).

## Sources

- Income Tax Act 1967 (Act 53), reprint as at 21 May 2024 — Part VIII and ss.103, 107C, 112 to 121, 140A — https://www.hasil.gov.my/wp-content/uploads/20240521-akta-cukai-pendapatan-1967-akta-53.pdf (LHDN)
- Kesalahan, Denda dan Penalti — https://www.hasil.gov.my/perundangan/kesalahan-denda-dan-penalti/ (LHDN)
- Sales Tax Act 2018 (Act 806), gazetted text — ss.26, 86, 94, 95 — https://lom.agc.gov.my/act-detail.php?act=806 (Attorney General's Chambers)
- Service Tax Act 2018 (Act 807) — ss.13, 26, 26A, 71, 79, 80 — https://lom.agc.gov.my/act-detail.php?act=807 (Attorney General's Chambers)
- Stamp Act 1949 (Act 378) — ss.47A, 60A, 61, 74 — https://lom.agc.gov.my/act-detail.php?act=378 (Attorney General's Chambers)
- Finance Act 2024 (Act 862) — s.26 substituting Stamp Act s.47A(1) from 1 January 2025, and s.22 substituting RPGTA s.21(4) — https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/2592589_BI/Act%20862%20-FINANCE%20ACT%202024.pdf (Attorney General's Chambers)
- Measures for the Collection, Administration and Enforcement of Tax Act 2024 (Act 863) — s.40 amending Stamp Act s.74 from 1 January 2025, and new Stamp Act ss.72B to 72D from 1 January 2026 — https://lom.agc.gov.my/ilims/upload/portal/akta/outputaktap/2592590_BI/Act%20863.pdf (Attorney General's Chambers)
- Real Property Gains Tax Act 1976 (Act 169) — ss.21, 21B, 29, 30, 31, 40 — https://lom.agc.gov.my/act-detail.php?act=169 (Attorney General's Chambers)

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