The Inland Revenue Board (IRB) of Malaysia has urged individuals running businesses to exercise due diligence when submitting claims for business expenses on the Income Tax Return Form B.
IRB senior executive Mohamad Nasir Mohamed Nazri advised on Bernama Radio’s Tax Clinic programme on May 19 that only expenses directly related to business operations are allowable, and these must be definite, actually incurred, and wholly for generating income [1, 2]. He stressed, "Accurate compliance in tax reporting is important to ensure the assessment process runs smoothly and to avoid enforcement action in the future" [1].
Examples of allowable expenses include employee salaries, raw materials or stock purchases, rental of premises, business license renewals, utility bills, product samples, and losses from employee misconduct [1, 2]. Claims can also be made for expenses incurred during the same business year even if those expenses have not been paid or the income has not yet been earned [1, 2].
Disallowed expenses encompass personal costs, owners’ salaries, capital expenditures such as asset purchases, start-up costs, depreciation, personal cash or stock withdrawals, travel from home to business premises, penalties, and fines [1, 2]. Nasir emphasized the need to separate business and personal expenses to prevent errors in income reporting [2].
He also highlighted that tax calculations differ from business profit and loss statements, allowing losses to be carried forward and deducted from future profits [1, 2].
Taxpayers must submit Form B or Form e-B for the Year of Assessment 2025 through the e-Filing system on the MyTax portal by July 15, 2026. Failure to meet the deadline or properly report income may lead to prosecution and audit actions [2].
