Every citizen of a country is subjected to pay tax according to the rules and regulations of that country. In Malaysia too, some rules and regulations are there regarding tax pay. A few years back, everyone whose salary exceeded RM2500 was eligible to pay taxes but the latest changes have made it RM2401.
Income taxes can be paid through offline and online. However, the most important thing needed for this procedure is to prepare an Income Tax Return Form or EA Form. This form is a must-to-have for every employer who has to prepare and render it to his or her employees. It is a statement of remuneration of the employees and the employees must properly fill and return the EA Form in accordance with the subsection 83(1A), Income Tax Act 1967, Malaysia.
However, before going through the procedures, we must know what income tax is and who are eligible to pay it
Income tax is an amount charged to individuals, cooperatives, companies, and others who are being paid through business, employment, rental, royalty, dividend, pension, and other types of income. The government decides the amount of tax according to the income range of the individuals.
Many people are reluctant to pay income taxes because they do not discern any visible benefits and returns of their spent money. However, you must keep in mind that the government needs this money to build hospitals, educational institutions, civic centers, public library, roads, and other infrastructures that are necessary to every citizen. So, you should pay taxes for your own well-being.
Lots of people find the filling of tax application form so bothersome that they fail or willingly forget to file their taxes. Remember that doing so will only slap you with so high amount of back-taxes that you may seek the help of moneylenders or psychiatrist. Well, it is not true but not paying taxes in time may require you to go through mountainous bothersome procedures.
An attempt has been made in the following to provide you some guidelines regarding the correct path to fill your income tax form or EA Form in Malaysia.
Do not Miss out any Single Detail:
i. As a tax-paying individual, you must ensure that you disclose the correct amount or claim the correct deduction when filling your income tax form. As an employee, you can rely on your EA Form given that the employer has declared the details properly in the form.
ii. You should not forget to include the additional details if you have other sources of income. If you have a side business or having rental income from a property within Malaysia, you are subject to pay tax for that.
iii. Remember that the deduction of monthly tax stated by an employer in the EA Form is not the final amount of payable tax. You are still required to accomplish some works to find and finalize your assessment for the whole year.
Do not be Late:
i. If you do not want to be slapped with a fine or penalty, file your taxes on time. It will also help you to avoid unwanted problems in future.
ii. The late submitters have to face a penalty of 20-35%. Moreover, according to the Inland Revenue Board, no extension of time is there for those who submit taxes in the conventional way. However, online applicants have given a 15-day extension.
iii. If you fail to submit EA Form within six months of the due date, you will be liable to pay fine or even will be subject to imprisonment.
So, just spend a little bit of effort and energy to avoid unnecessary and unwanted hassles of fines and penalties.
Keep Track of every Single Record:
i. Keeping updated the records of your EA Form and other relevant documents will make it easy for you to give reference if needed in future. It also helps you to access your data easily and quickly in time of need.
ii. Keeping altogether your receipts and other documents will make it easy for you to file a tax return or EA Form.
iii. You have to keep your supporting records for at least seven years. So, be careful in preserving documents; otherwise, the imprinted texts on the receipts may fade over time and put you in trouble.
Seeking the Help of Professionals:
i. The help of a professional is required if you are buried with back-taxes and other complicated stuffs.
ii. If you are an employee, you can submit the EA Form easily and quickly, especially via online. However, a tax consultant may be contacted if the situation is not so straightforward.
Following these aforementioned tips may help you to avoid hassles and complexities in filling your Income Tax Return Form or EA Form. You will be happy to know that, now you can carry out the whole process online, which is much easier and quicker than offline filling is. You can even save your work and come back later to complete the filling process if you are interrupted or unable to finish the filling at one time.
Whether you are a Malaysian citizen involved in employment or business, or someone who wants to set up business in Malaysia from outside, these guidelines will help you for sure.