2 Chinese nationals in Malaysia hit with $392K tax bills due to employer fraud

One of the workers, Li Juan, 42, uncovered the problem while attempting to renew her work permit. The second, Chen Bi Ling, 40, who is married to a Malaysian, became aware of the issue when she was extending her spouse’s visa, as reported by The Star.

A customer counts ringgit bills in denominations of 1, 50 and 100 at the service window of a money changer in Kuala Lumpur, July 22, 2005. Photo by AFP

"The employees were working in Kuchai Lama under an employer named Mr. Yu, 43, who is also a Chinese national," Michael Chong, head of Malaysian Chinese Association Public Services and Complaints Department, said at a recent press conference in Kuala Lumpur.

Chong said the employer’s alleged tactic was to exaggerate employees’ income when submitting tax filings.

Yu reportedly declared that the workers earned close to MYR1 million annually, which is far above their actual salaries of MYR7,000–10,000.

The employer misused the two victims’ identities and passports to file tax returns with the authorities. He also owns several minimarkets and a steamboat restaurant.

By reporting high salaries, the company could report lower profits and reduce its tax liability, Chong said, describing the case as an attempt by the employer to cheat the government, adding that similar cases have been reported frequently.

Goh Boon Keng, Deputy President of the Malaysia-China Friendship and Mutual Aid Association, said investigations were under way.

"We advise anyone coming to Malaysia for work to go through proper channels, including obtaining a formal letter of offer and payslips and to pay tax," Goh said.

These two victims were involved in this case because they did not receive proper documents and their employment details were only communicated through a social media messaging platform, he added.

Since they had never filed their own income tax, there was a potential risk of fraud that employers could exploit, he said.