Guide To Tax Assessment And Application In Malaysia

  • Post category:Malaysia

LHDN Malaysia published a public ruling on July 2020 explaining the procedures and requirements relating to tax appeals and applications for relief in line with the provisions of the income tax act 1967 (ITA). The ruling also guides how to submit the appeal using form Q and form N.

Relin Consultants’ guide below has summarised all the key points from the public ruling. If you require additional clarifications or assistance with an appeal against tax assessments, do reach out to us at 

Tax Assessment And Application In Malaysia – Detailed Guide

Rights To Appeal And Timelines For Appeal For An Sdn Bhd

The company that wishes to appeal must provide valid reasons for the disagreement with the assessment notice. 

The company does not have to provide supporting documents if the appeal is against best judgment assessments as per Section 90(3) of the income tax act.

When evaluating the appeal, the tax authorities at times, will request additional supporting papers. The company must submit evidence upon request. 

Taxpayers that qualify for an appeal must submit form Q no later than thirty (30) days after the notice of assessment has been served.

An appeal is generally only allowed for notice of assessment issued for a given year of assessment. This means deemed assessment under subsection 90(1) of the act or deemed assessment for amended income tax return form (ITRF) under section 91A of the income tax act will not be entitled to an appeal. 

Our firm recommends that you engage a professional firm such as Relin Consultants to assist you with the assessment to determine whether you qualify for a tax appeal.

As per the income tax act, there is no definition of an error or mistake. As a result, the taxpayer is responsible for establishing that there is an error or mistake. Only if the tax authorities are satisfied that the taxpayer made an error or mistake in the forms or statements sent to the authorities will the assessment be reviewed.

What Is The Appeal Procedure Using Form Q?

The following documents must be prepared and submitted during the appeal. 

  • Four copies of the form Q must be submitted for each YA by the appellant, where one of them has to be the original version, whereas the other 3 may be a photocopied version. 
  • A completed form Q has to be submitted to IRBM’s branch office, where there must not be any other attachments besides Form Q and relevant attachments. 
  • Download Form Q.
  • A lawyer or tax agent cannot sign Form Q, and an incomplete form will be returned to the appellant.
  • The completed form Q should have at least the date and amount of tax payable, detailed grounds of appeal, and signature of the appellant. 
  • The form must be signed by an authorized person, such as the Malaysia company’s director

What If The Appeal Was Not Submitted Within The Specified Period?

A company can still appeal by submitting a form N if it is a late appeal. 

Form N is an application form for when an appeal is not submitted within a specific period. 

A valid reason must also be provided for the extension of time where some of the reasons may include circumstances beyond the appellant’s control, such as being hospitalized for an extended period, being absent from the nation, being a victim of a natural disaster, or other acceptable and justifiable causes. 

The act also clearly states that the appellant must submit form N to LHDN within 7 years of receiving the notice of assessment. 

The submission of this form must be sent to IRBM’s branch office that handles the appellant’s income tax file, where 2 copies must be submitted. 1 copy has to be original, whereas the other copy may be a photocopy version, and this form can be downloaded

If the extension of time is allowed, a copy of the form CP15A will be sent to the appellant to inform them that the date of submission for form Q has been extended 30 days from the date of CP15A. I

f the extension of time is denied, The company will receive form N along with a statement from the authorities detailing the reasons for rejection (form CP15B). LHDN will notify the appellant in writing and provide a copy of the statement of reasons.

How Long Will The Authorities Take To Review The Appeal?

The review period is usually within twelve (12) months from the date of receipt of the notice of appeal. If LHDN requires extra time to review, they may extend the timeframe for an additional six (6) months. 

During the review, the appellant may be required to provide further information and attend in person or be represented by a representative to give evidence.

Requesting an application for relief

A letter or Form CP15C can be used for the application for relief where the reasons related to the application are stated clearly. If the letter or form has incorrect details, it will be returned to the taxpayer and a new application will be required. If LHDN approves the application, the assessment will be amended and reduced but if it is rejected, a rejection letter will be issued to the taxpayer with the grounds of rejection.


How an appeal is filed?

If a taxpayer receives an assessment notice and disagrees with it, they have the right to appeal. The appeal must be filed within 30 days of the notice’s date. Taxpayers must appeal in writing to the LHDN branch that issued the assessment. 

The taxpayer must next complete a Q Form, which will be forwarded to the special commissioners of income tax. 

If a taxpayer has a good reason for needing more than 30 days to file an appeal, they must seek an extension of time using the N Form. The form will be delivered to the special commissioners of income tax for review. 

The LHDN office has both the N and Q forms.

What is the required documentation?

To file a legitimate income tax appeal, taxpayers must prepare a letter describing the errors and specifying whether the errors are in costs claimed, deductions, exemptions, or other areas. If LHDN determines that the information is insufficient, they may request more supporting papers to alter the evaluation.

Who are Special Commissioners of Income Tax?

The Special Commissioners of Income Tax is an independent tribunal that hears tax appeals and is made up of panel members chosen by the Yang Di-Pertuan Agong.

What are the definitions of some of the commonly used terms in public ruling?

“Tax agent” is any professional accountant or person approved by the Minister of Finance. 

“Notice of assessment” is best judgment assessment under subsection 90(3) or 91(1) of the ITA, assessment, additional assessment, deemed assessment, notification of non-chargeability (NONC) (section 97A of the ITA), notification of refund of over-payment (section 111 of the ITA) and 

“Person” includes a company, a body of persons, a limited liability partnership, and a corporation sole. 

“The Special Commissioners of Income Tax” (SCIT) and “the Secretary to the SCIT” refer to the Special Commissioners and the Secretary appointed under section 98 of the ITA. 

“Appeal” is the appeal against an assessment.