This FAQ sets out basic information for taxpayers about the tax appeal process in Malaysia.

When should I appeal?

You may submit a tax appeal if:

  • You are not satisfied with the manner in which your income has been assessed.
  • Personal reliefs have not been appropriately given.
  • You have forgotten to claim certain expenses or reliefs.
  • There is an error in the assessment issued by the Inland Revenue Board (“IRB”).

I received an income tax assessment issued by the IRB, what can I do?

Payment of the disputed tax must be still made within the time stipulated in the assessment unless in exceptional circumstances where judicial review may be available.

However, the law provides that any person aggrieved by the assessment can appeal against that assessment by serving the Form Q not later than 30 days after the notice of assessment has been served or deemed to be served.

What is a Form Q? What is the appeal procedure like?

A Form Q is a notice of appeal and can be downloaded from the IRB website. Any taxpayer who wishes to appeal against the assessment must submit 4 copies of Form Q for each year of assessment with the grounds of appeal to the IRB branch handling that income tax file.

A completed Form Q must contain the following:

  • Date and amount of tax payable under the disputed notice of assessment; and
  • Detailed grounds of appeal containing the reasons why the taxpayer disagreed with the notice of assessment.

A Form Q must be signed by the taxpayer himself, or in the case of companies or partnerships, an authorised person.

Form Q should be submitted to the tax branch that the taxpayer’s income tax file is kept.

What should be stated in the appeal in the assessment?

The grounds of appeal should be properly and specifically described in the tax appeal to help in the IRB’s preliminary review of assessment. The grounds of appeal should be specific on the section referenced, the computation that is appealed against, and provide supporting documents where possible. Avoid vague statements like ‘tax excessive’/ ‘disagree with application of income tax act. The IRB will not be able to review the assessment without specific information and will forward it straight to the Special Commissioners of Income Tax (“SCIT”).

I would like to appeal against the assessment but 30-day time limit has passed, what else can I do?

A taxpayer can make an application for extension of time for appeal by submitting a Form N. In the Form N, the taxpayer must give a good reason for the application for extension of time, for example: absence from country, victim of natural disaster or other valid reasons.

Similar to Form Q, a Form N is a prescribed form that can be downloaded from the IRB website. The taxpayer must submit 2 copies of Form N for each year of assessment to the IRB’s office handling that income tax file.

If the application for extension of time is allowed, the IRB will issue a Form CP15A-Pin.1/2009 informing the taxpayer of the extended date for submission of Form Q, which is thirty days from the date of Form CP15A.

What if my application for extension of is not allowed?

Your Form N and the statement of reasons for rejection (Form CP15B) will be forwarded to the SCIT. The taxpayer will be informed of this in writing and be furnished with a copy of the statement of reasons for rejection.

Within 21 days of receiving the notification, the taxpayer may make a written representation to the SCIT in respect of the application and the statement of reasons for rejection.

If the SCIT agrees to allow the extension of time, the SCIT will notify the appellant and states the date the Form Q has to be submitted. If the application is rejected, the appellant will be notified by the SCIT and the appellant has no further right to appeal. The decision of the SCIT is final.

What happens after I submit the Form Q?

Under the law, the IRB has 12 months from the date of receipt of Form Q to review it. If the IRB requires more time to review, the Ministry of Finance may extend the period but the extension shall not be more than 6 months.

After the IRB reviews the Form Q, a proposal may be made to the taxpayer to settle the appeal by confirming, reducing, increasing or discharging the assessment.

However, if an agreement cannot be reached with the taxpayer, the Form Q will be forwarded to the SCIT and the taxpayer will be notified in writing of this.

What do I do when my Form Q has been forwarded to the SCIT?

The SCIT is a special tribunal which handles tax appeals comprised of individuals who have judicial and legal experience. The taxpayer may appeal to the High Court and Court of Appeal if it disagrees with the decision of the SCIT.

Generally, when the Form Q is forwarded to SCIT, the SCIT will fix dates for the parties (the taxpayer and the IRB) to file pleadings and eventually set the matter for a hearing. Do consult a qualified lawyer and/or a tax agent to represent you before the SCIT.

I made an error in my Income Tax Return Form and as a result paid excessive tax, how can I correct it?

If a taxpayer has paid excessive tax by reason of error or mistake in the tax return, the taxpayer may within five years after the end of the year of assessment within which the assessment was made make an application in writing to the IRB for relief.

To make an application for relief, the taxpayer must prove that there is an error or mistake AND the taxpayer must have paid all taxes under that year of assessment.

What is an ‘error’ or ‘mistake’?

Neither ‘error’ or ‘mistake’ is defined by the tax laws. Some examples of error or mistake from precedent cases would be:

  • error arising from misunderstanding of the law;
  • computation or arithmetical error;
  • error of omission such as failure to deduct an allowable expense; or
  • forgetting to claim relief.

What is the procedure after I submitted the application for relief?

Upon receipt of the application, the IRB shall inquire into the matter and, if appears to IRB to be just and reasonable, give relief by way of repayment of tax.

However, if the taxpayer is aggrieved by the decision of IRB on the application, the taxpayer may request the IRB to forward the application to the SCIT and the application will be deemed as an appeal before the SCIT. The procedure before the SCIT is similar to when a Form Q is forwarded to the SCIT (i.e. the SCIT fix dates for the parties to file pleadings and for hearing).

If I disagree with a tax treatment stated in a Public Ruling but have furnished my tax returns in accordance to the Public Ruling, what should I do since there is no assessment issued by the IRB?

Under the self-assessment system, a tax return furnished to the IRB is an assessment deemed to be made by the IRB. The law also provides that the right to file Form Q does not apply to deemed assessment, unless the taxpayer disagrees with the treatment stated in the Public Ruling or known stand, rules and practices or the IRB prevailing at the time when the assessment is made.

Therefore, if you have filed your tax return in accordance to a Public Ruling or known practice at that time but disagree with it, you may submit a Form Q to appeal against the deemed assessment, being your own tax returns within 30 days of your tax return date.

What you should not do is to submit an application for ‘relief’ since the law provides that no relief shall be given in respect of an error or mistake if the return was made on the basis of, or in accordance with, the practice of the Director General generally prevailing at the time when the return or statement was made.

I have furnished my tax return and paid my taxes and subsequently there is an exemption / relief granted for that year of assessment under a written law, can I make an application for relief?

Yes, the taxpayer may make an application for relief other than in respect of error or mistake. On receiving the application, the IRB shall inquire into the matter and may, if appears to IRB to be just and reasonable, give relief by way of repayment of tax.

If the taxpayer is aggrieved by the decision of IRB on the application, the taxpayer may request the IRB to forward the application to the SCIT.

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This article was written by Shawn Ho and Ee Lyne Chong from our corporate, property and tax practice group.  Our corporate team advises on legal compliance, corporate governance, shareholder and founder arrangements, joint venture and partnership structures and corporate tax matters. 

Have a query? Please contact us.

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