A spokesperson for the Inland Revenue Board (LHDN) said the company as well as individuals who serve on its board at the point of default will be held liable.
“The Income Tax Act 1967 states that a director who holds 20% or more of the ordinary shares of the company will be jointly and severally liable for MTD not remitted by the company,” the spokesperson told FMT.
However, he added, any corresponding action can only be taken against a person who holds a position as director during the period in which the MTD becomes due.
LHDN was responding to a query based on complaints from current and former employees of SAS who have lodged reports alleging that the company has failed to remit the tax deductions over several years.
Last month, FMT reported that the affected workers had filed reports with the LHDN and EPF over the aviation firm’s failure to remit the statutory deductions from their salaries.
The spokesperson said LHDN views the matter seriously and will address it promptly and fairly.
“However, more time may be needed if the required information is not readily available or in the event the parties involved choose not to cooperate,” she said.
“Therefore, cooperation from those involved is essential in order to resolve any outstanding issue.
“It is necessary for the affected employees to provide the required documents for investigation and verification purposes,” she added.
Before the MTD system was introduced, all individuals were responsible for ensuring that their dues were paid from income they received.
However, the onus was transferred to the employer when the MTD was made compulsory.
The spokesperson said a director, if found guilty, is liable to a fine of between RM200 and RM20,000 or to imprisonment not exceeding six months, or both.
SAS’s operations encountered turbulence after the Malaysian Aviation Commission did not renew its air service permit when it lapsed on Feb 29.
It was reported that the action was taken after the company failed to remit EPF and income tax deductions amounting to millions.
In a follow-up action on March 12, the Civil Aviation Authority of Malaysia suspended the company’s air operations certificate for 90 days until June 12.
The suspension was later extended to July 31.