Tax, SST and Customs Dispute Lawyers in Malaysia
Our tax dispute lawyers handle LHDN audits, Form Q appeals and Special Commissioners hearings, SST and customs disputes, and judicial review, working with your tax agent or accountant on the figures. Many deadlines are only 30 days. We advise after reviewing your documents.
- LHDN audits and appeals
- SST and customs disputes
- Judicial review applications
- Online consultations
How We Can Help
- Responding to LHDN tax audits and investigations
- Form Q appeals and hearings before the Special Commissioners
- SST and customs bills of demand and reviews
- Appeals to the Customs Appeal Tribunal
- Judicial review and appeals to the High Court
- Compounds, seized goods and tax recovery suits
Reviewed by Ms. Khoo Ai Theng, Founder, Advocate & Solicitor of the High Court of Malaya. Last updated October 2026.
Why Choose Us?
15+ Years
Legal experience
30 Days
To appeal an LHDN assessment on Form Q
5 Years
Usual limit for LHDN additional assessments, s 91
Pay First
Tax stays payable while an appeal is pending
What does a tax dispute lawyer do in Malaysia?
A tax dispute lawyer handles the legal side of a disagreement with the Inland Revenue Board of Malaysia (LHDN, also known as the IRB) or the Royal Malaysian Customs Department: objections, appeals, tribunal hearings, court proceedings and judicial review. Your tax agent or accountant remains responsible for the computations, and we work alongside them.
The main laws are:
- the Income Tax Act 1967 (Act 53), under which LHDN audits and investigates taxpayers, raises assessments and penalties, and responds to appeals before the Special Commissioners of Income Tax;
- the Sales Tax Act 2018 (Act 806) and the Service Tax Act 2018 (Act 807), under which Customs audits SST-registered businesses, issues bills of demand and responds to appeals before the Customs Appeal Tribunal;
- the Customs Act 1967 (Act 235), which governs import and export duties, tariff classification, valuation, seizures and compounds.
These disputes affect companies, SST-registered businesses, importers and exporters, directors and individual taxpayers. They usually start with a letter asking for documents and can end with an additional assessment, a bill of demand, penalties, a recovery suit or a travel restriction. Many steps carry a 30-day deadline, so early advice matters. Tax problems often sit alongside other disputes, such as claims between shareholders or against directors, which our corporate litigation team also handles.
What happens in an LHDN tax audit or investigation?
An LHDN tax audit checks whether your returns were correct, while a tax investigation looks into suspected evasion and can lead to prosecution. Both can end in an additional assessment with penalties.
- Audits happen at LHDN’s office or your premises. LHDN calls for documents under ss 78 to 81 of the Income Tax Act 1967, issues its findings and, if tax is owed, raises an additional assessment.
- LHDN can generally raise an additional assessment within five years after the end of the year of assessment (s 91(1)). There is no time limit where there has been fraud, wilful default or negligence (s 91(3)).
- The penalty for an incorrect return can equal the tax undercharged (s 113(2)). Under LHDN’s Tax Audit Framework, in force since 15 March 2025, audit penalties are normally 15%, 30% or 45% depending on previous offences, with none for technical adjustments and 10% or 15% for voluntary disclosures.
- Wilful evasion under s 114 carries a fine of RM1,000 to RM20,000, up to three years’ imprisonment or both, plus a penalty of treble the tax undercharged.
Your audit answers form the record for any appeal, so keep them accurate and consistent with your accounts. LHDN has said that e-invoice reporting errors can be corrected without penalty under a special voluntary disclosure programme until 31 December 2027.
How do I appeal an LHDN tax assessment?
An income tax assessment is appealed to the Special Commissioners of Income Tax, who are independent of LHDN, by filing Form Q within 30 days after the notice of assessment is served (s 99, Income Tax Act 1967).
- File Form Q with detailed grounds at your LHDN office, signed by the taxpayer or the company’s authorised officer, not by the tax agent or lawyer. Email filing is not accepted. A late appeal needs an extension on Form N (s 100).
- LHDN has 12 months, which the Minister of Finance can extend by up to six months, to review the assessment and try to settle (s 101), including through a Dispute Resolution Proceeding you can request.
- Without agreement, the Special Commissioners hear the appeal in private, and the taxpayer generally has to show that the assessment is excessive or wrong.
- Either side can appeal their decision to the High Court on a question of law, by notice of appeal within 21 days (paragraph 34, Schedule 5).
- A further appeal lies to the Court of Appeal within 30 days, generally the final stage for cases that begin before the Special Commissioners.
Errors in a return you filed yourself are usually corrected through relief under s 131, generally within five years, not Form Q. Our appeal practice handles the court stages.
How are SST and customs duty disputes challenged?
A Customs decision under the Sales Tax Act 2018 or the Service Tax Act 2018, such as a bill of demand, can be referred to the Director General of Customs for review within 30 days of notification, and appealed to the Customs Appeal Tribunal within 30 days of the decision (s 96 and s 81 respectively).
- Reviews should be decided within 60 days where practicable. You can instead appeal straight to the Tribunal.
- The tax remains payable meanwhile, and the Tribunal hears an appeal only after duties, taxes and penalties are paid.
- Customs must generally raise an SST assessment or demand within six years, but can assess at any time where there has been fraud or wilful default.
- Customs Act 1967 decisions on tariff classification, valuation or duty recovery also go to the Tribunal (s 143), whose decisions can be appealed to the High Court on a question of law or of mixed law and fact.
SST was widened on 1 July 2025: more non-essential goods carry sales tax at 5% or 10%, and service tax now covers rental and leasing, construction, financial services, and private healthcare and education for non-Malaysians. Rental and construction rules changed again in January 2026. Newly covered businesses may face their first Customs audit or a dispute over whether a service is taxable.
When can judicial review be used, and what about compounds and seizures?
Judicial review under Order 53 of the Rules of Court 2012 lets the High Court quash unlawful LHDN or Customs decisions. It needs leave and must be filed promptly and within three months of the decision being communicated (O 53 r 3(6)).
- Where a statutory appeal exists, judicial review is kept for exceptional cases such as clear illegality, lack of jurisdiction or a serious breach of natural justice. In Kind Action (M) Sdn Bhd, the Federal Court upheld a successful challenge to additional assessments tainted by clear illegality.
- It also applies where no appeal lies, such as a travel restriction under s 104 of the Income Tax Act 1967.
- Some offences can be compounded, with a payment accepted instead of prosecution. A service tax compound needs the Public Prosecutor’s consent and is capped at half the maximum fine (s 80, Service Tax Act).
- Absent a prosecution, seized goods are deemed forfeited unless claimed in writing within one month of seizure (s 128, Customs Act 1967). In Sarmiina Sdn Bhd v Gerry Ho (2023), the Federal Court held Customs must refer a valid claim to a Magistrate if it keeps the goods.
Compound and seizure matters cannot go to the Customs Appeal Tribunal. If prosecution is possible, our litigation team, which also handles criminal matters, advises on statements and charges.
How NZSK handles tax, SST and customs disputes
Every matter starts with a consultation, online or in person at our offices in Puchong, Selangor and Mont Kiara, Kuala Lumpur, in English, Bahasa Malaysia or Mandarin. We advise after reviewing the actual documents, not on a description alone.
- Bring the notice of assessment or bill of demand and the date you received it, audit letters, your correspondence with LHDN or Customs, the returns and computations, and the contracts, invoices or import documents behind the disputed items.
- Tell us at once if a 30-day deadline is running.
- Our litigation team handles the legal dispute: grounds of appeal, settlement proposals, hearings, court appeals and judicial review. Your tax agent or accountant handles the computations, and we work with them throughout.
- We tell you plainly when a challenge is weak, or when settlement or voluntary disclosure is the better course.
Cost depends on the amount and years in dispute, the volume of records, any extension or stay applications and how far the matter goes. We give a fee quotation after the consultation. Ms. Khoo Ai Theng (Maxine Khoo), a partner and Advocate & Solicitor of the High Court of Malaya admitted in 2014, acts in civil and corporate litigation. For ongoing advice, see our corporate advisory retainer.
Frequently Asked Questions
In Malaysia, an appeal against an LHDN income tax assessment must be filed on Form Q within 30 days after the notice of assessment is served, under section 99 of the Income Tax Act 1967. Form Q must set out detailed grounds and be signed by the taxpayer or the company's authorised officer, not by a tax agent or lawyer. An ordinary letter or a verbal objection is not a valid appeal.
If the 30-day deadline to appeal an LHDN assessment is missed, the taxpayer can apply for an extension of time on Form N under section 100 of the Income Tax Act 1967. From the year of assessment 2020, Form N must be filed within seven years after the appeal period ends, with strong reasons such as long hospitalisation, absence from Malaysia or a natural disaster. If LHDN refuses, the Special Commissioners decide, and their decision is final.
Yes. In Malaysia, tax under an LHDN assessment must be paid by the due date even if an appeal has been filed, under section 103 of the Income Tax Act 1967, and late payment attracts a 10% increase. The Government can sue to recover unpaid tax, and the court will not entertain a plea that the amount is excessive or under appeal. Unpaid tax can also lead to a travel restriction under section 104.
In Malaysia, LHDN can generally raise an additional income tax assessment within five years after the end of the year of assessment, under section 91 of the Income Tax Act 1967. The five-year limit does not apply where there has been fraud, wilful default or negligence, and LHDN carries the burden of proving it on appeal. Businesses must keep their records for seven years from the end of the year to which the income relates.
After an LHDN tax audit in Malaysia, the penalty for an incorrect return can be as high as the tax undercharged, under section 113(2) of the Income Tax Act 1967. Under the Tax Audit Framework in force since 15 March 2025, the usual rates are 15%, 30% or 45% depending on previous offences, with no penalty for technical adjustments and 10% or 15% for voluntary disclosures. A penalty can be appealed together with the assessment.
In Malaysia, a person aggrieved by a Customs decision, such as an SST or customs duty bill of demand, can apply to the Director General of Customs for a review within 30 days of being notified, and can appeal to the Customs Appeal Tribunal within 30 days of the decision. SST must still be paid while a review or appeal is pending, and the Tribunal hears an appeal only after the amounts due are paid. Its decision can be appealed to the High Court.
Generally only after the statutory appeal route. In Malaysia, an LHDN assessment is appealed first to the Special Commissioners of Income Tax, and a Customs decision to the Customs Appeal Tribunal, with further appeals to the High Court. Judicial review under Order 53 of the Rules of Court 2012 needs leave, must be filed within three months, and is usually allowed only for clear illegality, lack of jurisdiction or a serious breach of natural justice, or where no appeal lies.
The cost of a tax, SST or customs dispute in Malaysia depends on the amount and number of years in dispute, the volume of records, whether extension or stay applications are needed, and whether the matter goes to the Special Commissioners, the Customs Appeal Tribunal or the courts. NZSK works with your tax agent on the figures and gives a fee quotation after reviewing your documents at a consultation, online or in person.
Received an LHDN assessment or a Customs bill of demand?
Form Q appeals and SST reviews must generally be filed within 30 days, so contact us as soon as you receive the notice. We advise once we have reviewed your documents at a consultation, online or in person, at our Puchong or Mont Kiara office.
- (+60)12-401 4799 | (+60)3-8060 0267
- [email protected]
Consultation by appointment at Mont Kiara, Kuala Lumpur and Puchong, Selangor, or online.
