According to Principal Assistant Director at the Kuala Lumpur Inland Revenue Board (IRB), Syed Mohd Syukree Syed Mohd Kamil, business owners are under the misconception that they don’t need to declare their income tax if their business is operating at a loss.

Business owners are required to report their income even if they incur losses. Regardless of profit or loss, annual income submission is mandatory. Syukree reassured that operating at a loss doesn’t necessarily mean being taxed, but if there’s additional income like a salary, the total income will be assessed under Form B, potentially leading to taxation based on the combined income.

During the Bernama Radio Tax Clinic program on the topic ‘Business Profit or Loss: Required to Submit Form B’, Syukree mentioned that individuals earning from activities like YouTubers, influencers, or paid reviews are considered to be running a business and must report their income. Failure to do so is a criminal offense under section 112(1) of the Income Tax Act 1967, which may result in fines or imprisonment upon conviction.

Non-compliance could also trigger a tax audit, involving a detailed review of all business transactions and financial documents. To avoid such issues, he advised beginning income reporting via Form B or e-B on the MyTax Portal from March 1 to July 15. Maintaining proper tax records for at least seven years, including financial statements and invoices, is recommended for a smoother reporting process.

Only expenses directly related to the business are eligible for tax claims, and it’s important to distinguish between business and personal expenses to avoid mistakes. Complying with income reporting obligations not only ensures adherence to tax laws but also enhances a business’s credibility and reputation, potentially leading to benefits like government incentives and exemptions.

(Source: Bernama)

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• business loss
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• Form B
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• section 112(1) of the Income Tax Act 1967
• Syed Mohd Syukree Syed Mohd Kamil
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