LHDN Urges Proper Declaration Of Business Expenses In Tax Returns

KUALA LUMPUR, May 19 (Bernama) -- The Inland Revenue Board of Malaysia (LHDN) has reminded individuals running businesses to exercise due diligence when submitting claims for business expenses via the Income Tax Return Form or Form B.

LHDN Corporate Services Department senior executive II Mohamad Nasir Mohamed Nazri said not all expenses can be claimed as business costs, as only those directly related to business operations and activities are permitted.

“Those involved are advised to be mindful in separating business and personal expenses to prevent any errors in submitting and reporting their respective income.

“Accurate compliance in tax reporting is important to ensure the assessment process runs smoothly and to avoid enforcement action in the future,” he told reporters after appearing as a guest on Bernama Radio’s Tax Clinic programme today.

Mohamad Nasir said allowable expenses have certain characteristics, including that they must be definite and actually incurred, and may not always involve cash outflows, such as giving product samples to customers and losses resulting from employee misconduct.

“In addition, the expenses must be incurred wholly for the purpose of generating income, such as employee salaries, the purchase of raw materials or business stock, premises rental, business licence renewals and utility bills.

“Claims can also be made for expenses incurred during the business period within the same year, even if they have not yet been paid, such as purchases on credit, as well as expenses incurred to generate gross income even if the income has not yet been earned in the same year,” he said.

Regarding disallowed expenses, Mohamad Nasir said these include personal expenses, owners’ salaries, capital expenditure, the purchase of business assets, start-up costs, depreciation, personal cash or stock withdrawals, travel costs from home to business premises, as well as penalties and fines.

He said tax calculations differ from business profit and loss statements, noting that any losses incurred can be carried forward to the following year and deducted from future profits.

Meanwhile, Mohamad Nasir reminded taxpayers to submit Form B or e-B for the Year of Assessment 2025 by July 15, 2026 through the e-Filing service on the MyTax portal.

He said failure to submit and report income within the specified period could result in individuals being prosecuted in court, as well as being subject to a business audit.

Mohamad Nasir said that taxpayers who are unsure about tax calculation methods or form-filling procedures may seek assistance via the official HASiL portal, the HASiL Contact Centre, or by visiting the nearest HASiL office.

-- BERNAMA