Filing taxes is required by law in most countries including Malaysia, but many people put it off or avoid it due to confusion, fear of getting it wrong, or thinking it doesn’t apply to them. However, whether you’re working full-time, freelancing, running a business, or even studying with a side income, filing your taxes is both a civic duty and an important financial task.
This article explains why you should file taxes in Malaysia, what could happen if you don’t, and how staying on top of it can benefit you over time.
The main reason to file your taxes is simple — it’s required by law. In Malaysia, the Inland Revenue Board (LHDN) expects anyone earning above a certain amount (currently RM34,000 after EPF deductions) to submit a tax return every year.
If you don’t, you could face fines, penalties, or legal action. Not knowing the rules isn’t an excuse, so even if you think your income is too low, it’s best to file your taxes or check if you’re officially exempt.
Tax authorities take late submissions seriously, and the penalties can add up fast. In Malaysia, for example, a late tax return can lead to a 10% penalty on the unpaid tax, which increases if you delay further.
In serious cases, you could face bigger fines or even legal action. Filing your taxes on time helps you avoid these extra costs and stress.
Believe it or not, you might be missing out on money. If tax has been deducted from your pay (through payroll) but your total taxable income is lower than expected, you could be eligible for a tax refund.
Filing your tax return makes sure you don’t owe the government — and more importantly, that they don’t owe you. This often applies to students, part-timers, or people with more than one job.
Filing your taxes gives you the chance to claim tax reliefs, rebates, and deductions that can increase your refund. These claims reduce your taxable income, which means you could get more money back from the government.
Some common tax-deductible expenses include:
If you skip filing, you miss out on all these potential savings — and a bigger refund.
A consistent tax filing history helps you build a verified financial profile. This can be essential when applying for loans, credit cards, business licences, or government support.
Banks and agencies often need your tax documents to check your income. If you don’t have them, it could affect your chances.
It also shows you’re financially responsible and doing your part to support public services like healthcare, education, and roads.
Filing taxes is now easier than ever. With online systems like Malaysia’s e-Filing, you can complete your return in just 30 minutes. The platform uses pre-filled information, lets you upload documents, calculates your tax automatically, and allows you to pay or request refunds online — all in one place. It’s designed to be user-friendly, making the whole process quick and straightforward.
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