Penalty for late submission of tax clearance forms
It is a criminal offense in Malaysia to delay the submission of tax clearance forms. The penalty will be either a fine of between MYR 200 and MYR 20,000, imprisonment of up to six months, or both as deemed appropriate by the Malaysian Inland Revenue laws. This penalty does not only apply to the employer, but the expatriate should he/she be flagged as a tax evader and be prevented from leaving Malaysia.
In case of a departure stoppage, contact the relevant persons and clear your arrears immediately to avoid embarrassment. You can do so via the internet and present proof of payment which will accord you a revocation order and permit you to proceed with your journey. It is important to not take advantage of this provision because things might not work in time for your flight. As you plan to leave Malaysia check stoppage status by visiting the branch offices of LHDN. It is better to be sure than sorry.
As an expatriate in Malaysia, ensure you submit your tax clearance whether your visa has expired or not, as long as you are leaving Malaysia for more than three months or are ceasing employment in terms of resignation, termination of the contract, or retirement. Should there be any more owed you which will be due after you have left Malaysia, you are required to declare these payments. These payments may be your retirement compensation, bonuses, or contract payments which are to be paid on a later date. The LHDN will determine which one is taxable or not. Otherwise, you are liable for tax noncompliance penalties. Any expatriate who is on a professional visit, that is they have flown here on a visit Pass to do professional work, does not get their income taxed hence they don’t need tax clearance, the same is true for someone who has worked for less than a month. Do not be scared, in case of delay or short notice before departure, present this piece of information to LHDN.