The Malaysian revenue authorities have set clear objectives to uphold the country’s taxation policies and address common errors, such as late submission of tax returns. To tackle these issues, the government has enacted specific laws and penalties to discourage non-compliance. According to Sing and Bidin (2020), penalties are imposed for failure to declare income or submit tax returns on time.

Matar (2023) further highlights that penalties are tailored to different types of offences. Taxpayers are required to submit their returns to the Inland Revenue Board (IRB) within the stipulated deadlines, as missing these deadlines constitutes a significant offence. Most companies in Malaysia maintain their financial statements in accordance with the Companies Act 2016 (PwC, 2023). Tax revenue is collected under the provisions of the Income Tax Act 1967.

Taxation policies are structured based on individual income, with adjustments for tax-related losses as stipulated by relevant regulations. Section 77B emphasizes the importance of aggregate income (Sanusi et al., 2021). Additionally, loan approval policies fall under specific legislative acts, and individuals face severe penalties for land-related offences. Providing incorrect information regarding tax liabilities can result in substantial penalties. Section 113(1) mandates a penalty of up to 200% of the tax liability for such offences (Incometaxmanagement, 2023).

The Malaysian Finance Minister oversees loan policies, which require approval under section 150. Loans granted by operational headquarters must also receive approval from the Director General. Under section 116, individuals obstructing the duties of the IRB face significant penalties (Landco, 2023). The definition of federal territories and territorial areas plays a crucial role in Malaysia’s taxation framework.

Offshore business activities are generally non-chargeable under Malaysian tax policies. However, chargeable income includes rents, premiums, and other similar earnings. Act 119(a) imposes a fine of RM10,000 on businesses that fail to maintain proper financial records (Synergytas, 2023). Section 113(2) allows for the reduction of penalties in cases of inaccurate tax information. This provision has been in effect since 2020, with penalties for first offences reduced by 15% due to the pandemic’s impact on taxpayers (Razak & Bidin, 2019).

The Malaysian government continues to refine its taxation policies, ensuring compliance while accommodating the challenges faced by individuals and businesses. These measures aim to balance strict enforcement with support for economic recovery.