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Directors' + Shareholders' Liability for Company's Tax

Who is liable to pay tax liabilities of a Company, if the Company fails to pay its corporate tax and Monthly Tax Deductions as an employer?


According to Income Tax Act 1967 (ITA), Section 75A, "a director" of a Company is liable.


What is meant by "a director" by the Act?


Meaning of a Director

The meaning of “A Director” as provided under S75A(2) are summarised below:

  1. A person holding the post of “a director” or by whatever name it is called AND holding at least 20% of the ordinary share capital of a Company.

  2. A person holding at least 20% of the ordinary share capital of a Company, whether directly or indirectly.

  3. A person holding at least 20% of the ordinary share capital of a Company, indirectly through its "Associate".


A Big Change

It is worth to note that prior to 24.1.2014, the ordinary share capital requirement was more than 50%.


Meaning of Associate

"Associate" in relation to a person for the above purpose are very broad, as follows:


Company Directors Who are Liable

A company director who is liable under S75A is a person who is:


(a) a director during the period in which tax was due and payable by the Company.

(b) a director during the period in which the debt (relating to MTD) is liable to be paid by the company.


Reference

hasil.gov.my>>>legislation>>>public rulings>>>2/2019 (14 March 2019)


Disclaimer

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