It appears that to meet collection target, the Inland Revenue Board (Lembaga Hasil Dalam Negeri Malaysia, LHDN) is coming down very hard on late filing of the tax returns.

While this is well within their rights under the law, this law was made in times when tax instalment payments, by employers or otherwise, were not in place and all tax payable were settled only upon the tax return filing.

It’s not right for LHDN to commit to a collection target by targeting taxpayers just because they file late, as compared to those who never file and pay at all.

These days, when most of our tax is already deducted at source via monthly tax deductions (Potongan Cukai Bulanan, PCB) if employed and various other forms of monthly instalments, it is just not fair to penalise late filing too harshly.

Maybe a fine of RM1,000 or few thousand ringgit should do, but to penalise at 20 percent or more of the tax payable, when most of the tax has already been paid, is just not how a tax system should operate.

The penalty should just be applied to the amount of unpaid tax and not the tax payable as in the tax returns.

There also appears to be a significant difference if the late submission is made manually or online.

Those who submit online but late have the penalty automatically charged as compared to those who file manually. So, if we are late, better file manually.