WH LEE & CO - Chartered Accountants

20/03/2026

KUCHING (March 3): The High Court here on Tuesday granted a taxpayer leave to commence judicial review proceedings against the Inland Revenue Board (IRB) over a dispute involving the alleged double taxation of a property gain.
The matter arose when the taxpayer reported and paid Real Property Gains Tax (RPGT) on gains derived from the disposal of real property shares.

The RPGT assessment became final and conclusive after no appeal was lodged within the statutory time frame.

Subsequently, the IRB conducted an audit and determined that the same gain should have been classified as income and assessed under the Income Tax Act 1967.

The Board then vacated the earlier finalised RPGT assessment and issued an additional income tax assessment, together with a penalty.

The taxpayer is challenging the legality of the IRB’s actions, contending that the unilateral cancellation of a finalised assessment, without prior notification, deprived him of his statutory right of appeal and was procedurally improper.

Satisfied that the application disclosed arguable issues of law, the High Court granted leave for judicial review.

The substantive hearing is scheduled for April 8 this year, when the court will determine the legality of the director-general’s decision-making process.

Representing the taxpayer is B**g Siak Peng of B**g Siak Peng Advocates, assisted by Datuk Wong Joo Hua of JPRO Tax Consultancy and tax consultant Lam Kam Wing.

The Borneo Post

05/02/2026

KUALA LUMPUR (Feb 4): Petrol station canopies and halide lights are recognised as “plant”, entitling them to be counted as capital allowances under the Income Tax Act 1967, the High Court has ruled.

In allowing PETRONAS Dagangan Bhd's (KL:PETDAG) appeal against the director general of the Inland Revenue Board (IRB), High Court judge Datuk Amarjeet Singh Serjit Singh ruled that these features in petrol stations were necessary because without them, the company would not have generated its income.
Amarjeet added that according to case laws, "plant" was not defined in the Act and must be given the "widest possible meaning". Also pertinent was the industry concerned and the specific circumstances of the taxpayer's business.

"Applying the principles by giving the word 'plant' in Schedule 3 of the ITA (Income Tax Act) the widest possible meaning and giving due consideration to the petrol filling station industry, this court holds that the canopy and halide lights considered as a whole constitutes 'plant' as it is something necessary without which [PETRONAS Dagangan] could not have generated its income," he said in his grounds of judgement dated Jan 19.
Among others, the judge noted that the special type of aluminium used for ceilings — Luxalon — is unique to petrol stations as it is non-flammable and reflects light. These were fixtures of the present day's petrol stations, he said.
"In this regard, I had considered the case-law which shows that although an item in question is a structure and part of a building, this fact does not disqualify the structure from being a 'plant' by means of which the petrol filling station's business is carried on.
"A 'plant' may play a passive role. Thus, in the instant case, the canopy and halide lights fitted [...], passive they may be in nature, [but they] are [the company's] apparatus or tool by means of which the petrol filling business activities are carried on a daily basis," he said.
The court's decision concerned three consolidated appeals by the company against the Special Commissioners of Income Tax's (SCIT) orders in 2018 and 2019.
The SCIT had upheld the IRB director general's earlier decision to refuse the company's claim for capital allowances on several items in petrol stations operated by PETRONAS Dagangan. Parties reached an agreement on all items in the list except for the canopy and halide lights, precipitating the court's determination.
The court also ruled that the respective tax assessments be amended and the excess tax paid, along with the penalties to be refunded.
The court had initially delivered its decision in November last year and the full grounds were released last month.
Lawyers Anand Raj, Foong Pui Chi, and Lim Shuwern of Messrs Shearn Delamore & Co appeared for PETRONAS Dangangan, and senior revenue counsel Ashrinna Ramzan Ali appeared for the IRB.

The Edge 05.02.2026

19/01/2026

01/01/2026

Been getting CP500 tax installment notices? You might have filed your taxes wrong, says LHDN.

In a statement today, the IRB said CP500 is issued only if taxpayers report income from both employment and non-employment sources in accordance with Section 107B of the Income Tax Act (ITA) 1967.

PUTRAJAYA, Dec 31 — The Instalment Payment Notice (CP500) issued to taxpayers in stages in December 2025 is based on information reported in the Income Tax Return Form (ITRF) submitted to the Inland Revenue Board (IRB).

In a statement today, the IRB said CP500 is issued only if taxpayers report income from both employment and non-employment sources in accordance with Section 107B of the Income Tax Act (ITA) 1967.

It added that the board has received complaints and feedback from taxpayers who received CP500 despite having only employment income.
“Based on further review, the IRB found that the taxpayers concerned had made inaccurate reporting in their ITRF.

“Part of the employment income was reported as income from dividends, interest, rent, royalties, pensions, annuities and any other gains or profits,” it said.

For individual taxpayers who have only employment income but have received CP500, the IRB said they may submit the Application Form for Amendment of Instalment Payments (CP502).

The form must be submitted together with Form EA/EC (Statement of Remuneration from Employment) to the CP500 Help Desk via email at [email protected].

The IRB reminded taxpayers to report income accurately in the ITRF to ensure efficient and orderly tax administration.

“The IRB remains committed to strengthening support and guidance for taxpayers to facilitate the transparent and efficient fulfilment of tax obligations,” it said.

— Bernama

25/12/2025

21/12/2025

No penalties in first year of new stamp duty system, says LHDN

Bernama

The inland revenue board says it is to help ease duty payers into the new self-assessment system.

LHDN said it has already opened the self-assessment e-stamp duty system via the MyTax portal to facilitate testing and preparation.

PUTRAJAYA: The inland revenue board (LHDN) will not impose penalties during the first year of the self-assessment e-stamp duty system for applications submitted from Jan 1-Dec 31, 2026, in an effort to ease duty payers into the new regime.

In a statement today, LHDN said the concession covers errors in Stamp Duty Return Form (BNDS) submissions, inaccurate information affecting stamp duty assessment, and offences identified under subsection 72D(2) of the Stamp Act 1949.
“The measure is intended to ease duty payers into the new system, encourage voluntary compliance and allow time to familiarise themselves with electronic self-stamping,” it added.

The self-assessment e-stamp duty system has been opened for early access via the MyTax portal to facilitate testing and preparation.

Assistance is available via the HASiL contact centre at +603-8911 1000, HASiL Live Chat, or the feedback form at maklumbalaspelanggan.hasil.gov.my/Public/on LHDN’s official portal.

18/12/2025

Stamp Duty exemption for employment

14/12/2025

SSM Compounds on Audit Qualifications: Heavy Enforcement at the Wrong Time

Many directors and small and medium enterprise (SME) owners were recently shocked to receive compound notices from the Companies Commission of Malaysia (SSM) soon after lodging their audited financial statements. These compounds were imposed following qualified, adverse, or disclaimer audit opinions, with penalties reaching RM40,000 to RM50,000 for companies and RM30,000 to RM40,000 per director.

Even after discounts of 50% or 75%, the remaining sums are still substantial for SMEs. For many, this enforcement action feels sudden, punitive, and poorly timed.

As a former President of the Malay Chamber of Commerce and a long-serving accounting practitioner, I believe this move is unwelcomed, burdensome, and not in the spirit of nurturing Malaysian businesses, particularly at a time when SMEs are already under severe pressure.

The Reality Facing SMEs

SMEs today operate in a difficult environment. Cash flow is tight due to delayed tax refunds and more aggressive enforcement by the Inland Revenue Board (IRB). Sales margins are shrinking as foreign companies—especially from China—enter the Malaysian market with significantly lower prices. At the same time, operating costs continue to rise, driven by higher minimum wages, statutory contributions, utilities, logistics, and compliance requirements.

Against this backdrop, audit qualifications have become more common. In many cases, they arise from impaired receivables, inventory valuation issues, weak documentation, or going-concern uncertainties. These are often symptoms of economic distress, not fraud or deliberate misconduct.

Yet SSM’s recent actions appear to treat all audit qualifications as immediate enforcement triggers, warranting heavy compounds without distinction.

Why Impose Compounds Now?

The timing of this enforcement drive is deeply concerning. If the goal is to improve corporate governance, then enforcement should be measured and sensitive to economic conditions.

Many affected SMEs are already struggling to meet tax instalments, negotiating with creditors, downsizing operations, and fighting intense market competition. Imposing five-figure penalties at this moment risks pushing otherwise viable businesses into insolvency.

Good regulation should strengthen resilience—not weaken it.

Why No Warning Before Punishment?

Equally troubling is the apparent lack of warning. Many companies lodged their accounts in good faith through the MBRS system, only to receive compound notices shortly afterwards. There were no advisory letters, no rectification periods, and no opportunity to explain or improve.

This creates the perception that enforcement is automatic and revenue-driven, rather than aimed at improving compliance.

Regulators should not be silent enforcers lying in wait. Effective regulation requires communication, proportionality, and due process.

Education Must Come First

Most SME directors are not accountants. They rely heavily on auditors and company secretaries to guide them. Penalising directors heavily—especially non-executive or “sleeping” directors—without prior education or warning is neither fair nor effective.

Corporate governance cannot be built on fear alone. Without education, enforcement becomes punitive rather than corrective.

Wider Consequences for Business Confidence

This approach risks unintended consequences. Directors may resign to avoid personal liability. SMEs may avoid audits altogether where exemptions apply. Transparency could decline instead of improve.

Malaysia’s economic success has always depended on a partnership between government and business, particularly in supporting local enterprises. Heavy-handed enforcement undermines trust and discourages entrepreneurship.

A More Balanced Way Forward

SSM’s statutory powers under the Companies Act 2016 are not in question. However, how those powers are exercised matters. Several policy improvements should be considered.

First, SSM should introduce a mandatory warning and rectification framework. For first-time audit qualifications not involving fraud, companies should receive warnings and be given reasonable time—90 to 180 days—to improve records or rectify issues before any compound is imposed.

Second, SSM must clearly distinguish between economic distress and misconduct. Going-concern or impairment-related qualifications should not be treated the same as deliberate misstatements.

Third, personal liability for directors should be proportionate to their role. Non-executive and inactive directors should not be penalised at the same level as executive directors who control day-to-day operations.

Fourth, enforcement should follow a graduated approach—from advisory notices, to warnings, to reduced penalties, and only then full compounds for repeated non-compliance.

Finally, education must precede enforcement. SSM, together with professional bodies, should strengthen director awareness programmes and publish clearer guidance on the implications of audit qualifications.

Conclusion

Strong corporate governance is achieved through clarity, fairness, and trust, not fear. A regulator that educates before it penalises strengthens the economy; one that compounds without warning risks weakening it.

If Malaysia is serious about supporting SMEs as the backbone of the economy, regulatory enforcement must remain firm yet humane, lawful yet business-friendly, and truly Malaysian in spirit.

Abd Halim bin Husin
Former President of the Malay Chamber of Commerce 20-23

06/12/2025

Govt raises e-invoicing income threshold to RM1mil

Previously, only businesses with annual revenue below RM500,000 were to be exempted from mandatory e-invoicing, which comes into effect on Jan 1.

Prime Minister Anwar Ibrahim said this was decided by the Cabinet yesterday.

PETALING JAYA: The government has decided to exempt businesses with annual revenue under RM1 million from e-invoicing, which comes into effect on Jan 1.
Prime Minister Anwar Ibrahim said this was decided by the Cabinet yesterday.

“The initial threshold of RM500,000 (for mandatory e-invoicing) has been raised to RM1 million. This means that small companies no longer need to carry out e-invoicing,” Anwar, who is also the finance minister, said at an event in Kota Kinabalu, Sabah, today.

In June, the Inland Revenue Board (LHDN) had said the finance ministry had decided that the implementation of e-invoicing for companies earning between RM1 million and RM5 million will be deferred to Jan 1, 2026 from the previous July 1, 2025.

Implementation for companies with annual revenue of up to RM1 million, now scrapped, was to have been deferred to July 1, 2026.

DAP adviser and former finance minister Lim Guan Eng had said the dismal performance of Pakatan Harapan in the Nov 29 Sabah state election could be attributed to Chinese voters’ rejection of specific policies such as expansion of the sales and service tax (SST), the e-invoicing rollout; as well as delayed tax refunds.

Separately, Anwar said that beginning Jan 1, the progress rate of all water supply, electricity and road projects will be monitored on a monthly basis to prevent delays.

02/12/2025

IRB limits tax-exempt status for non-profits to 10 years
By theedgemalaysia.com
02 Dec 2025, 12:07 pm
Updated - 12:53 pm

KUALA LUMPUR (Dec 2): The Inland Revenue Board of Malaysia (IRB) has set a 10-year limit for tax-exempt status given to non-profit groups — such as charities, welfare bodies, religious institutions, education funds and community service non-government organisations — that can receive tax-deductible donations.
This rule takes effect retroactively on Nov 27, 2025.

The affected institutions, organisations and funds are those that fall under Section 44(6) of the Income Tax Act 1967, IRB said in a statement.

Under the new ruling, IRB will issue updated notification letters to organisations whose approvals end on Dec 31, 2025, detailing the application of the 10-year limit.
Approvals granted before Nov 27, 2025 will remain valid for the duration previously stated, with the new limit applying only after their current approval expires.
IRB also highlighted that compliance audits will continue throughout the approval period. Organisations that fail to meet the required conditions risk having their tax-exempt status revoked, after which their income may be taxed in accordance with Schedule 6 of the Act.

The Edge Malaysia is Malaysia's leading financial news organisation, committed to reporting the truth with independence and integrity. Our flagship publication, The Edge, provides authoritative and analytical content on corporate, investment, and economic issues, as well as news on real estate, digi...

05/11/2025

Firms won’t be allowed to offset excess payments against future tax liabilities.

FMT Reporters

Deputy finance minister Lim Hui Ying says companies will be permitted to revise their tax estimates in the 11th month, allowing for more accurate estimations.

Deputy finance minister Lim Hui Ying said LHDN’s decision will help minimise situations where taxpayers overpay. (Bernama pic)

PETALING JAYA: The Inland Revenue Board (LHDN) will not allow companies to offset excess tax payments against future tax liabilities, said deputy finance minister Lim Hui Ying.

Instead, companies are now allowed to revise their tax estimates in the 11th month, compared to previously being allowed to do so in the sixth, ninth or both months.
Lim said this allows companies to make more accurate tax estimations based on their actual financial position, allowing revised estimates closer to their true tax liability.

“Estimates closer to the actual tax amount can help minimise situations where taxpayers overpay,” Bernama reported her as saying in the Dewan Rakyat’s special chamber session today.
She was responding to a supplementary question from Wee Ka Siong (BN-Ayer Hitam) on the issue of delayed tax refunds to companies.

The Edge reported that several MPs had earlier raised concerns over refund delays, with some companies reportedly receiving full refunds only after five years.
They urged the government to consider allowing excess tax payments to be offset against future tax liabilities.

Lim said LHDN also prioritises small and medium-sized enterprises and companies facing cash flow problems.
She said the agency has implemented several strategies to strengthen and streamline the tax refund process, ensuring that allocations are distributed fairly and efficiently, with priority given to older outstanding cases.

“Among the measures introduced is the adoption of the first-in, first-out concept, which allows older refund claims to be processed first,” she said.

10/10/2025

COA affirms that income earned as independent director is taxed as business income
By Tarani Palani / theedgemalaysia.com
09 Oct 2025, 06:11 pm

The three-member Court of Appeal panel was led by judge Datuk Collin Lawrence Sequerah.
PUTRAJAYA (Oct 9): The appellate court has upheld that income earned as a company's independent non-executive director is to be taxed as business income, and not employment income.
In unanimously dismissing the Inland Revenue Board (IRB)'s appeal against Datuk Oh Chong Peng, a three-member Court of Appeal (COA) panel led by judge Datuk Collin Lawrence Sequerah said that as the law stands, there is a clear demarcation between an executive director and an independent non-executive director, and that the independent director's fees should be treated as a business income.
The other members on the panel were COA judges Datuk Seri Mohd Firuz Jaffril and Datuk Nadzarin Wok Nordin.

IRB's appeal on Thursday was over a sum of RM398,374 as additional taxes, for the assessment years from 2002 to 2012. In gist, Oh had paid his taxes, but the IRB contended that the remuneration fell under a different category and therefore was subjected to a higher tax rate.

During this period, Oh, a chartered accountant by training, had served on the board of 17 companies, some of which included Alliance Financial Group Berhad, AmBank Berhad, British American To***co (Malaysia) Berhad, IJM Corporation Berhad, Malayan Flour Mills Berhad and UEM Land Berhad.

Oh had reported this income as gains from a business, as he had transferred his independent director's remuneration to two management companies — OCP Holding Sdn Bhd and Garzania Sdn Bhd.
Thursday's appeal came after the High Court in February 2024 reversed the Special Commissioners of Income Tax (SCIT)'s decision in Oh's case. The SCIT is an independent body which hears tax-related appeals.

Among others, presiding High Court judge Datuk Ahmad Kamal Shahid had said that the SCIT had erred when it concluded that the definition of “independent director” set by Bursa Malaysia was mere guideline, and that Oh came under the category of "employee" under the Income Tax Act (ITA) 1967.
The High Court also ruled that a mere disagreement over which category the tax would fall under did not mean that there was negligence on Oh's part. The court found that the IRB had failed to show a legal or factual basis to impose any penalty on Oh.
IRB asks how is being a director a business, lawyer points out directors may not be remunerated
Thursday's proceedings saw a lively discussion between the panel judges and Senior Revenue Counsel (SRC) Ahmad Isyak Mohd Hassan, who appeared for IRB, and Oh's lead counsel S Saravana Kumar.
Ahmad Isyak argued that in general, an independent director is not an employee of a company; however, according to the ITA, he/she would be subjected to taxation by virtue of the "employment income".
He went on to ask how the independent directors' remuneration falls under "business income", when being a director is not a business.
"The remuneration was paid to him for his own services. He transferred the income from the 17 companies to two management companies. He declared it as business income, which was subjected to a much lower rate.
"That is a personal arrangement. The question is whether [the monies] were the income of the company?
"Can a company have a business of providing a directorship? That is very peculiar. A director is appointed by the company in his personal capacity. A company can hold shares, but it cannot become a director," Ahmad Isyak argued.
Saravana however rebutted that as with his client's previous testimony, Oh had been declaring the remuneration as business income and it had been accepted by the IRB.
He also said that Oh had been an independent director of some companies that fell under the purview of the Finance Ministry. Saravana said that his client would surely be vetted for these roles, and anything amiss would have been flagged.
He added that there are cases where non-executive directors may not be remunerated as it was subject to approval during the company's Annual General Meeting (AGM). He also added that the remunerations were “gains” and therefore ought to be taxed as gains and profits from business.
Ahmad Isyak was assisted by SRC Marina Ibrahim, while Saravana was assisted by Felicia Wong.
On Thursday, the court also made an order for the IRB to provide Oh with a refund for the additional taxes that Oh had paid — within three months of this ruling.

The Edge Malaysia is Malaysia's leading financial news organisation, committed to reporting the truth with independence and integrity. Our flagship publication, The Edge, provides authoritative and analytical content on corporate, investment, and economic issues, as well as news on real estate, digi...