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The Income Tax (Amendment) Act 2017 and Labuan Business Activity Tax (Amendment) (No. 2) Act 2017 (“Amendment Acts”) have been gazetted on 29 December 2017 with no significant changes from the Income Tax (Amendment) Bill 2017 and Labuan Business Activity Tax (Amendment) (No. 2) Bill 2017.  The Amendment Acts come into operation on 30 December 2017. 

The Amendment Acts are available on the e-Federal Gazette Portal (Home > Amending Act > ACT A1556 / ACT A1555).

Previously, the penalty provisions in the Income Tax Act, 1967 (“ITA”) and Labuan Business Activity Tax Act 1990 (“LBATA”) specifically covered non-compliance with Country-by-Country Reporting (“CbCR”) and Common Reporting Standards (“CRS”) that are implemented under mutual administrative assistance arrangement.

Further to the gazette of the above Amendment Acts, the penalties are now extended to cover CbCR and CRS implemented or facilitated under double taxation agreement or tax information exchange agreement.

The relevant penalties are as follows:


Penalty under ITA upon Conviction

a)   Failure to furnish a Country-by-Country Report


·      Fine between RM20,000 to RM100,000; or

·      Imprisonment for a term not exceeding 6 months; or

·      Both the above fine and imprisonment term.

b)  Incorrect returns, information returns or reports

c)   Failure to comply with rules made under Section 154(1)(c) of the ITA


Penalty under LBATA that could be prescribed by the Minister of Finance under the Regulations

a)   Failure to comply with any provisions of the Regulations* that may be made by the Minister of Finance


·     Fine not exceeding RM1million; or

·     Imprisonment for a term not exceeding 2 years; or

·     Both the above fine and imprisonment term.

Note*: E.g. Labuan Business Activity Tax (Country-by-Country Reporting) Regulations 2017 gazetted on 26 December 2017. 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Contact KPMG

Should you have any questions, please do not hesitate to contact any of our Executive Directors, Directors, Associate Directors or Managers whom you are accustomed to dealing with or who are responsible for the tax affairs of your organization at telephone number (603) 7721 3388.