Tax Update: Public Ruling No. 4/2022 (Recovery from persons leaving Malaysia)

The Inland Revenue Board of Malaysia (IRBM) recently issued Public Ruling No. 4/2022 (dated 20 October 2022) to replace Public Ruling No. 12/2015 (dated 17 December 2015).

Under section 104 of the ITA, if the Director General (DG) is of the opinion that a taxpayer is about to leave Malaysia without paying:

1. All sums payable by DG in relation to:

a. Increase in tax charged for overdue payment of tax [subsection 103(3), (5) or (7) if the ITA] or

b. Increase in tax charge for late payment of tax by instalments [subsection 107(3) or subsection 107C(9) of the ITA]

c. When the amount of the difference between the tax payable under an assessment for that assessment year and the total of the installments payable exceeds 30% [subsection 107B(4) of the ITA], the tax is increased.

d. If the amount of the difference between the tax payable under an assessment for the year of assessment and the revised estimate or deemed revised estimate, whichever occurs later, or if neither a revised estimate nor a deemed revised estimate is provided, an increase in tax will be assessed [section 107C(10) of the ITA].

e. An increase in tax imposed on tax payable if:

i. The DGIR does not provide an estimate nor does it provide a Notice of Installment Payments (CP 205) to make payments in instalments pursuant to Section 107C(8) of the ITA.

ii. No legal action has been taken under ITA’s 120(1)(f) against anyone for failing to provide such an estimate.

iii. The corporation, LLP, trust body, or cooperative organization is required to pay tax in accordance with an assessment for the assessment year.

2. All debts payable by him on withholding tax from:

a. Contract payment [subsection 107A (2) of the ITA]

b. Interest and royalties [subsection 109(2) of the ITA]

c. Special classes of income [subsection 109B (2) of the ITA]

d. Miscellaneous income [subsection 109F (2) of the ITA]

Derived from Malaysia and payable to a non-resident person.