Malaysian Tax Penalties and Offences Reference

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.

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.

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.