Unpaid CP500 Instalments Alone Won't Bar Taxpayers From Overseas Travel, Parliament Told

On Tuesday, November 11, during question time in the Dewan Rakyat, Deputy Finance Minister Liew Chin Tong gave a direct answer to a question many Malaysian taxpayers have been asking: can missing a CP500 instalment get you stopped at the airport? His answer was no, not on that ground alone.

Liew said CP500, the instalment scheme, is not a final tax assessment. A taxpayer's actual liability is settled only after they submit their Income Tax Return Form, known as BNCP, for the relevant assessment year. At that point the tax payable is recalculated, and any CP500 instalments already paid are deducted from the total.

Only if a balance remains unpaid within the stipulated period does it become outstanding tax, he said, and only then could travel restrictions come into play. "Failure to pay CP500 instalments does not result in taxpayers being barred from travelling overseas, as CP500 is not a final tax assessment," he told the House.

The question came from Chow Yu Hui, the PH member for Raub. He asked whether the Inland Revenue Board (LHDN) has the authority to restrict overseas travel over unpaid CP500 instalments, what the legal basis would be, and how many people have been affected. The reply, as reported, set out the legal framework but gave no figure for the number affected.

Liew explained that the Immigration Department can impose travel restrictions on people blacklisted by various government agencies, including LHDN, the Royal Malaysian Customs Department and the Insolvency Department. The purpose is to trace debtors and recover outstanding payments. For LHDN, the restrictions can apply to people who have not settled outstanding income tax under Section 104 of the Income Tax Act 1967, or real property gains tax under Section 22 of the Real Property Gains Tax Act 1976.

Chow pressed the point in a supplementary question. He said some taxpayers have complained that they were prevented from travelling even though they were disputing estimated tax payments that had not been finalised. He asked what justifies limiting a person's freedom of movement over a liability that is not yet confirmed, whether there is a minimum amount of outstanding tax before a restriction applies, and whether affected taxpayers are properly notified. He also asked who would bear the losses if LHDN's final tax estimates turned out to be inaccurate, and whether the government was prepared to review the policy.

Liew's reply addressed timing rather than each of those points. Restrictions, he said, are imposed only after the Income Tax Return Form has been finalised. Where payments are outstanding, they are generally imposed after six months if no payment has been made and the taxpayer has not responded to LHDN.

He advised taxpayers to check their outstanding tax status on the MyTax portal and to verify their travel status on the Immigration Department's website before making overseas travel arrangements. The reported exchange did not include answers on a minimum threshold, on compensation for wrongly based restrictions, or on any policy review, so those questions remain open.