(TAX UPDATE) The Tax Refund Myth – It Takes a Long Time to Get Your Tax Refund Part II

01(TAX UPDATE) The Tax Refund Myth – It Takes a Long Time to Get Your Tax Refund Part II

Following our first blog post on “The Tax Refund Myth – It Takes a Long Time to Get Your Tax Refund” (published 30 June 2025), we were flooded with calls, WhatsApp messages, and emails from KTP’s clients all asking the same thing:

“Boss, is it true that LHDN will refund 100% if the amount is small?”

Some quoted specific thresholds: “If less than RM5,000, confirm refund over 4 years !”
Others forwarded charts showing a tiered refund system based on the age of the tax return.

To be honest, we’ve seen the same chart … unofficial and without any official confirmation from LHDN. But it does reflect a refund pattern that seems to be circulating among tax practitioners.

02Year-by-Year Rumoured Refund Criteria

Let us break down what’s being rumoured in the market :

📅 Tax Return < 1 Year Old

• 100% refund only if below RM5,000
• Anything above? Likely capped at 5% refund

📅 Tax Return = 1 Year Old

• 100% refund if under RM7,000
• RM7,000–RM70,000? Possibly RM7,000
• Over RM70,000? Refund may be estimated at 10%

📅 Tax Return = 2 Years Old

• Full refund if under RM10,000
• RM10,000–RM100,000 : RM10,000
• Over RM100,000 : Estimated 10% refund

📅 Tax Return = 3 Years Old

• 100% refund if below RM15,000
• RM15,000–RM150,000 : RM15,000
• Over RM150,000? Estimated 10% refund

📅 Tax Return = 4 Years Old

• 100% refund — regardless of amount?
• Some say yes, but again, no official black-and-white.

03Is This Official?

Let’s be clear.

As of today, there is no official LHDN announcement confirming a guaranteed minimum refund policy based on refund amount and return age.

Yes, some recent refund trends appear to reflect this pattern. But without formal guidelines, it remains a rumor and it is not policy.

04What You Need to Know as an SME Boss

• No shortcut: Submitting accurate, timely tax filings is still your best bet for a smooth refund.
• Refund audit still possible: Even if your refund is “small,” LHDN can still call for verification.
• Be ready for variation: The refund treatment might differ across sectors, companies, or even based on your past compliance history.
• Risk of relying on hearsay: Planning your cash flow around rumored refund percentages is risky business.

05Final Word

We understand that cash is tight, especially in SME operations.

Always check your tax position with your trusted agent or accountant, and keep records ready in case LHDN asks.

If a formal guideline is ever published, we’ll be the first to update you.

Stay sharp.

Past Blog on Tax Refund

30/6/2025 The Tax Refund Myth – It Takes a Long Time to Get Your Tax Refund https://www.ktp.com.my/blog/tax-refund-lhdn/30june2025

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