MOST of our tax statutes contain a similar theme to deal with taxpayers who have outstanding taxes.
If you don’t pay your taxes, you can be barred from leaving the country.
This is now becoming a frequent occurrence, and taxpayers only realise this when they reach the airport and are prevented from boarding their flights.
This is very upsetting for taxpayers whose travel plans will be derailed at the last minute, sometimes at significant cost and may give rise to emotional distress.
Even small amounts of outstanding taxes can give rise to travel bans.
It is important that every taxpayer should check his tax position before leaving the country to avoid unexpected surprises. The taxpayer can either do this through his myTax portal (https://mytax.hasil.gov.my/), or through the Immigration department’s portal (https://sspi.imi.gov.my/sspi/).
If there are any outstanding taxes, it is best to settle the taxes.
If you disagree with the outstanding taxes or assessments raised, you should immediately file an appeal within the time limit provided for in the respective tax legislations.
Filing an appeal does not discharge your responsibility from settling the outstanding taxes.
Under all tax legislations, the tax authorities should issue a certificate to the taxpayer personally or by registered post stating that the travel ban has been issued to the taxpayer.
It is irrelevant whether you have received the notice if tax authorities have served the notice to you personally or by registered post to your address stated in the tax authorities’ records.
Therefore, it is important that you update the tax authorities of your latest address so that this notice does not go to the wrong address.
The tax authorities should equally be responsible to ensure that the taxpayer is informed upfront in writing about the taxpayer’s travel ban status as this is required under the respective tax legislations.
What happens if you are stopped?
In the unfortunate event that you are stopped at the airport or at any other point of departure, the immigration officials will provide you a list of IRB or RMCD officials you should get in touch with to obtain a release of the travel ban.
The next step will be to contact the relevant officials and find out the reasons for your travel ban, and the amount of taxes owing.
Normally, if the taxpayer is able to fully settle the outstanding taxes at the airport or point of departure through any acceptable payment methods (e.g. the IRB ByrHasil portal https://byrhasil.hasil.gov.my/HITS_EP/), the release from the travel ban will be immediately effected.
In the event you are unable to pay the full amount, you can negotiate to pay a percentage of amount outstanding and obtain a temporary release for that single travel.
Upon your return, you need to settle the balance either in a lump sum or through instalments.
If you are leaving the country for medical treatment, the tax authorities may favourably consider giving you a temporary release without any settlement of taxes.
Who is affected?
It is important to note that directors of companies whose taxes have not been settled will also be affected by the travel ban.
This cuts across income tax, stamp duty, real property gains tax, customs duties, sales tax, and services tax.
Directors should be reminded that they can be held liable for the unpaid taxes of their companies.
An exceptional provision in the Stamp Act 1949 is that in the event the taxpayer attempts to leave Malaysia without paying all the stamp duties and penalties, he shall on conviction be liable to a fine not exceeding RM5,000 and he may be arrested without warrant.
To avoid any distress before traveling, it is important for taxpayers to check your status before leaving Malaysia.
This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com).
