For businesses, the situations below may arise sometimes:

1.  Tax payment has been made more than the tax payable or tax imposed;  
2. Reduced assessment has been approved which resulted in a tax credit in the ledger which can be refunded; or
3. Tax deducted from dividend (at source) is greater than the tax payable in a year of assessment (YA). 

When the above situations do take place, the business will then be eligible for a tax refund. Nowadays, tax refunds are dispersed automatically by the Malaysian Inland Revenue Board (HASiL, hereafter abbreviated as IRB). However, what if you keep waiting but the refund never gets credited to your account? 

In the event that you do not receive your tax refund, you may apply to make an application to IRB by using either one of the following methods:

1. Make an application (by preparing a letter) to the Collection Unit of the IRB’s branch where your income tax file is located;
2. Complete and submit via IRB’s Feedback Form (http://maklumbalas.hasil.gov.my/); or
3. By calling the Hasil Care Line at toll-free number 03-8911 1000. 

Please note that if you use method 1 or 2, do call the Hasil Care Line occasionally to check your refund status so that you know whether the IRB is processing your refund or whether they require more information from you. 

Compensation on Late Refund of Overpayment of Tax 

Taxpayers who file their tax return for a YA by the due date will be eligible for a compensation of 2% per annum on any tax overpaid. This is with effect from YA 2013 by virtue of section (s.) 111D of the Income Tax Act (ITA) 1967. For e-filing submissions, the tax refund should be made within 90 days from the tax filing due date. On the other hand, tax refunds for manual submissions should be made within 120 days from the tax filing due date. 

Conditions for compensation:

1. The income tax return form (ITRF) was submitted within the stipulated filing deadline;
2. You must have tax overpaid pursuant to s.107, s.107B, or s.107C of the ITA 1967; and
3. The ITRF was submitted correctly and completely. 

Computation of Compensation

The amount of compensation is calculated based on a daily basis starting from the first day after 90/120 days from the tax filing due date in accordance with the following method: 

A: The amount of refund under s.111 of ITA 1967 for a YA

B: Number of days starting from the first day after the expiry of 90/120 days from the due date of when the ITRF must be submitted until the tax refund is approved

C: Number of days in a year (365/366 days)

Did you know? There are certain taxpayers who are not eligible for compensation. Could you perhaps be one of them?