Guan Eng lauds LHDN for automatic 2pc compensation on late tax refunds

Guan Eng lauds LHDN for automatic 2pc compensation on late tax refunds



A general view of the Inland Revenue Board of Malaysia building at Jalan Duta in Kuala Lumpur on April 23, 2020. — Picture by Hari Anggara

Thursday, 29 Jan 2026 10:31 AM MYT


KUALA LUMPUR, Jan 29 — Bagan MP Lim Guan Eng today commended the Inland Revenue Board (LHDN) for its decision to automatically pay a two per cent annual compensation on delayed tax refunds, describing this as a welcome relief for taxpayers.

Following a meeting with LHDN chief executive officer Datuk Dr Abu Tariq Jamaluddin, Lim confirmed that taxpayers will no longer need to apply for the compensation, as the agency will now make the payment on its own initiative.

“LHDN’s readiness to make this 2 per cent annual compensation payment automatically is very welcome as it eases the burden on taxpayers, who no longer need to submit written applications,” Lim said in a statement.

The compensation is mandated under Section 111D of the Income Tax Act 1967 for refunds delayed beyond a specified period.


The issue affects an estimated 1.5 million taxpayers who were owed more than RM33 billion in delayed refunds accumulated since 2020.

Lim also praised Prime Minister Datuk Seri Anwar Ibrahim for his role in resolving the five-year issue, both by directing LHDN to clear the refund backlog by the end of this year and for ensuring compliance with the compensation law.

He noted that while the two per cent compensation rate is modest compared to the 10 per cent penalty LHDN imposes on taxpayers for late payments, “every little bit helps.”


The compensation applies to both individual and corporate taxpayers for refunds arising from payments like monthly tax deductions (PCB) and instalment payment notices (CP500).

The meeting, which Lim described as “highly constructive,” was also attended by several other MPs and senior LHDN officers.