Finance (No. 2) Act 2023 · Updated to 29 Dec 2023 · Chapter 17
225. Failure of Constituent Entity to furnish Top-up Tax return
Feedback & supportAny Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance with section 202 shall be guilty of an offence and shall, on conviction, be liable to a fine of not less than twenty thousand ringgit and not more than one hundred thousand ringgit or to imprisonment for a term not exceeding six months or to both.
Constituent Entity
“Constituent Entity” means— (a) any Entity that is included in a Group; or (b) any Permanent Establishment of a Main Entity that is within paragraph (a) and which is treated as separate from the Main Entity and any other Permanent Establishment of that Main Entity, but does not include an Excluded Entity;
Any Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance with section 202 in respect of any Reporting Financial Year for two years or more shall be guilty of an offence and shall, on conviction, be liable to—
Top-up Tax return
“Top-up Tax return” means a return in the prescribed form as provided under section 202; Finance (No. 2)
a fine of not less than one thousand ringgit and not more than twenty thousand ringgit or to imprisonment for a term not exceeding six months or to both; and
a special penalty equal to treble the amount which the Director General may, according to the best of his judgment, determine as the tax charged on that
Constituent Entity for those Reporting Financial
Years.
In any prosecution under subsection (1) or (2)
the burden of proving that a Top-up Tax return has been furnished shall be upon the Constituent Entity.
Where a Constituent Entity has been convicted of an offence under subsection (1) or (2), the court may make a further order that the Constituent Entity shall comply with the relevant provision of this Act under which the offence has been committed within thirty days, or such other period as the court thinks fit, from the date the order is made.
Where in relation to a Financial Year a Constituent Entity who has defaulted in furnishing a Top-up Tax return in accordance with section 202 and no prosecution under subsection (1) or (2) has been instituted in relation to that default—
Financial Year
“Financial Year” means an accounting period with respect to which the Ultimate Parent Entity of the Multinational Enterprise Group prepares its Consolidated Financial Statements and in the case of Consolidated Financial Statements as defined in paragraph (d) of the definition of “Consolidated Financial Statements”, Financial Year means the calendar year;
the Director General may require that Constituent Entity to pay a penalty equal to treble the amount of that tax which, before any set-off, repayment or relief under this Act, is payable for that year; and
if that Constituent Entity pays that penalty, or, where the penalty is abated or remitted under section 234, so much, if any, of the penalty as has not been abated or remitted, the Constituent Entity shall not be liable to be charged on the same facts with an offence under subsection (1) or (2).
The Director General may require the Constituent Entity to pay an additional amount of penalty in accordance with subsection (5) in respect of any additional tax which is payable by that Constituent Entity for a Financial Year.