Your Company Owes Tax? Directors May Have to Pay It Personally

Many directors believe that if the company owes tax, only the company has to pay. A recent High Court case shows it is not always that simple.

In the grounds of judgment for Kerajaan Malaysia v a company and two of its directors (Shah Alam High Court, BA-21NCvC-12-02/2026, dated 3 November 2026), the Government claimed about RM2.55 million in company tax for the years of assessment 2020 to 2023 directly from two directors.

What happened?

The company did not respond to the lawsuit, so judgment was entered against it. The two directors defended themselves. They said the tax amount was wrong, that they had never seen the assessment notices, and that they had been discussing the amount with LHDN.

What did the court decide?

The court found that the two were directors during the years the tax was due, and that their shareholdings met the level set by the law, which covers directors who own or control at least 20% of the ordinary shares. That made them jointly and individually liable for the company's tax.

The notices had been sent by registered post to their last known addresses and were not returned, so the court treated them as properly delivered, even though one director said he never saw them.

Disagreements about how much tax is payable must go through the tax appeal process, not be raised as a defence when LHDN sues to recover the tax. The court ordered the directors to pay the full amount, plus 5% yearly interest and RM2,000 costs.

What does this mean for you?

If you are a director and a shareholder, company tax may follow you personally. Keeping your address updated with LHDN, reading every notice, and appealing on time if you disagree can make a real difference.

Our team can help with tax computation and filing, support during tax audits, and advice on tax matters for your company. Feel free to WhatsApp us at 010-246 2151.