LHDN Travel Bans and Tax Recovery in Malaysia: Lifting a Restriction and Defending a Tax Claim
LHDN can stop a person from leaving Malaysia over unpaid tax. Under section 104 of the Income Tax Act 1967 and section 22 of the Real Property Gains Tax Act 1976, LHDN can ask the Immigration Department to prevent a taxpayer, or a director of a company with unpaid tax, from leaving the country. LHDN can also sue for unpaid tax as a debt, and in that suit the court will not hear an argument that the assessment is wrong.
NZSK advises individuals, directors and companies facing travel restrictions, tax recovery suits and directors’ liability claims: on lifting or temporarily releasing a restriction, negotiating instalments, defending recovery proceedings where a legal defence exists, and challenging the underlying assessment through the proper route. We advise after reviewing your documents at a consultation.
Key Deadlines
30 Days
To appeal an LHDN assessment on Form Q
30 Days
For a Customs review or Tribunal appeal
1 Month
To claim goods seized by Customs
5 Years
Usual LHDN look-back for additional assessments
Why does LHDN impose a travel ban?
LHDN describes travel restrictions as a last resort, imposed after reminders and notices have gone unanswered and the tax is still unpaid. They are issued under sections 104 and 75A of the Income Tax Act 1967 and section 22 of the Real Property Gains Tax Act 1976, and can cover income tax, company tax and real property gains tax. Directors can be restricted for their company’s unpaid tax.
Many people only find out at the airport. LHDN reported in December 2024 that more than 200,000 individuals and companies were under travel restrictions.
How do you check whether you have a travel restriction?
Check your status on the MyTax portal (mytax.hasil.gov.my) or the Immigration Department’s travel status portal, SSPI (sspi.imi.gov.my). LHDN advises checking before booking any trip abroad. If a restriction appears, find out which tax, which years and which taxpayer it relates to, because a director’s restriction for company tax is handled differently from one for personal tax.
How is an LHDN travel ban lifted?
A restriction is lifted once the outstanding tax is settled. Since 4 March 2025, eligible taxpayers can apply online through the e-Travel Restriction Cancellation service on MyTax, which LHDN aims to process within five working days. Online cancellation is available only where:
- the applicant is a Malaysian citizen;
- the tax has been paid in full;
- the restriction was imposed under the Income Tax Act 1967; and
- it is not a company director’s case.
Other cases, including directors restricted for company tax, are dealt with by the LHDN branch. Where full payment is not possible, LHDN may grant temporary relief to travel after part payment or an agreed instalment arrangement.
Are directors personally liable for a company's unpaid tax?
Often, yes. Under section 75A of the Income Tax Act 1967, a director concerned in the management of the company who, alone or with associates such as a spouse or relatives, owns or controls at least 20% of its ordinary share capital is jointly and severally liable for the company’s tax, and for monthly tax deductions (PCB) it should have remitted for employees, for the period in which the tax was payable. LHDN can sue that director directly and restrict their travel. A director who was not in office, or held less than 20%, during the relevant period may have a defence, so dates and the share register matter.
What happens when LHDN sues for unpaid tax?
Unpaid tax can be recovered by civil proceedings as a debt due to the Government (section 106). LHDN usually applies for summary judgment, and the court will not entertain a plea that the tax is excessive, incorrectly assessed, under appeal or incorrectly increased (section 106(3)). The time to dispute an assessment is the 30-day Form Q appeal, not the recovery suit.
Some defences remain, such as a challenge to the legality of the assessment itself, payment already made, the wrong person being sued, or a notice that was never validly served. Courts have also granted stays in special circumstances. A judgment can be enforced, including through bankruptcy or winding up.
How NZSK handles travel ban and tax recovery matters
Bring any LHDN letters and notices of assessment, the restriction details from MyTax or SSPI, your payment history and, for directors, the company’s share register and your dates of appointment and resignation. If you are travelling soon, tell us the date. We work out what is owed and why, advise on payment, instalments or temporary release, check whether section 75A really applies to you, defend recovery proceedings where there is a legal defence, and advise on whether the assessment itself can still be challenged. Fees depend on the amounts and years involved and whether court proceedings have started; we give a fee quotation after the consultation.
Frequently Asked Questions
Speak to a Tax & Customs Lawyer Now!
- (+60)12-401 4799 | (+60)3-8060 0267
- [email protected]
Consultation by appointment — Mont Kiara, Kuala Lumpur & Puchong, Selangor
