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Malaysians who run businesses are still required to declare their income even if the business is running at a loss, according to a senior officer at the Kuala Lumpur Inland Revenue Board (LHDN) office
Principal assistant director Syed Mohd Syukree Syed Mohd Kamil said that many taxpayers mistakenly believe they are exempt from filing income declarations when their businesses are not profitable.
"Making losses in business is normal. Whether you make a profit or not, you are still required to file and declare your income every year," he said on Bernama Radio's Klinik Cukai programme earlier today, 8 April.
He stressed that business losses do not automatically translate to having to pay taxes.
However, if an individual also has other income sources, such as a salary, all earnings are taken into account under Form B, which applies to individuals with business income.
He also clarified that anyone receiving income from business activities, including YouTubers, influencers, or individuals doing paid reviews, is considered to be running a business and must file their returns
Failure to do so is a criminal offence under Section 112(1) of the Income Tax Act 1967 and can result in a fine ranging from RM200 to RM20,000, imprisonment of up to six months, or both.
In addition, individuals who do not declare their income could be subjected to a full tax audit, which involves a detailed inspection of business transactions and financial records.
This process can be time-consuming and may harm the business's reputation and finances, Syed warned.
To avoid complications, he advised taxpayers with businesses to start submitting their returns — either through Form B or e-B on the MyTax portal — between 1 March and 15 July.
He said only expenses directly related to the business are eligible for tax claims.
"You must be able to clearly distinguish between business and personal expenses to avoid mistakes when submitting and reporting your income," he was reported as saying by the New Straits Times.
