Submission of tax estimates in Malaysia is mandatory under Section 107C of the Malaysian Income Tax Act, 1967. The prescribed form for initial submission is Form CP204 and for revision of the initial submission is Form CP204A.
How to submit the Estimate of Tax Payable?
By prescribed form CP204.
The due date for submission of CP204 + Monthly Instalment as per Form CP205
Every company is required to determine and submit its estimated tax payable for a year of assessment via Form CP204, not later than 30 days before the beginning of the basis period.
For newly incorporated Companies, the estimated tax payable must be submitted within 3 months from the date of commencement of its business.
SME is not required to furnish an estimate of tax payable or make instalment payments for a period of 2 years beginning from the year of assessment in which the SME commences operations.
The monthly instalment of the estimated tax is payable not later than the 15th day of each month.
LHDN's statement via letter on CP204 for MSMEs
LHDN has made statements, on the above that, all companies are to submit their estimate tax payable via Form CP204, notifying the LHDN of its MSME status with a ZERO amount of tax payable to avoid any possible unnecessary penalty due to administrative issues, even though these companies are not required to submit CP204.
If a penalty under Section 107C is imposed or notification of legal proceedings under Section 120 is issued to an MSME, you may refer to the LHDN Branch where the Company income tax returns are maintained for waiver of the penalty.
What are MSMEs?
LHDN categorised MSMEs (Micro, Small and Medium Enterprises) as those companies having paid up ordinary share capital of not more than RM2.5 million at the beginning of the basis period and gross income from business sources not more than RM50 million for a year of assessment.
How to revise the Estimate of Tax Payable? When?
By using the prescribed form CP204A on the 6th and 9th month of the basis period.
Any revision other than the above months required an appeal letter, subject to LHDN approval.
The revised estimate of tax payable for a year of assessment shall not be less than 85% of the estimated tax payable (CP204) or the revised estimate of tax payable (CP204A) furnished for the immediately preceding year of assessment.
To apply for a tax estimate of less than 85% of the previous estimate or revised estimate, a letter of appeal for the lower estimate with supporting documents is to be submitted to Pusat Pemprosesan Maklumat, LHDN.
As announced in Budget 2022 - 11th month revision of CP204 for YA 2021-2022 and on deferment of CP204 payment and instalment payment scheme (CP500) for Micro, Small and Medium Enterprises (MSMEs) from January 2022 to June 2022.
Updated as per the LHDN feedback on FAQs on 3 December 2021.
11th-month revision of CP204
Previously, LHDN's FAQs stated that where the 11th month of a company's basis period falls in October, November or December 2022, the 11th-month revision must be submitted to the IRB before 31 October 2022. However, the updated FAQ dated 3 December 2021 stated that the concession would now only apply to a company where the 11th month of the basis period falls in November 2022. The 11th-month revision would not apply if the company's 11th month of the basis period falls in December 2022. For the YA 2021, the due date for submission is on 30 November 2021, however, the due date has been extended to 10 December 2021. For YA 2022, if the 11th month of the basis period is November 2022, the due date for submission is on 31 October 2022.
The special form for the 11th-month revision can be downloaded from the LHDN website as follows:
the duly completed form can be submitted via email to email@example.com.
companies can make the payment based on their 11th-month revision of tax estimate figure, with no need for approval from LHDN.
LHDN will issue a revised instalment payment schedule (CP205) as a notification.
the estimate of tax payable for YA 2022 and YA 2023 shall not be less than 85% (based on the latest revised estimate) of the tax estimate or the revised tax estimate in accordance with S 107 C (3) of the ITA 1967.
companies that have been allowed for deferment of CP204 payment for the period from 1 January 2022 to 30 June 2022 are also eligible for the 11th-month revision of CP204.
Deferment of CP204 payment and instalment scheme CP500 for MSMEs from 1 January 2022 to 30 June 2022
MSMEs have been granted a deferment of CP204 payment for a period of 6 months, from 1 January 2022 to 30 June 2022.
the deferment of tax instalments from 1 January 2022 to 30 June 2022 is also applied to the subsidiary company, where the holding company is a Non-MSME if the criteria of MSME are fully satisfied by the subsidiary company.
the deferment of tax instalments from 1 January 2022 to 30 June 2022 is also applied to a Limited Liability Partnership (LLP) if the criteria of MSME are fully satisfied by the LLP.
Investment Holding Companies (IHC) and companies within large MNEs that fulfil the MSME criteria also will be allowed to defer their instalment payment. (CTIM is seeking more clarification on these as the IHC is under Section 60F and does not have income from business sources).
Taxpayers who are eligible for the deferment based on this current MSME status, who is not qualified previously and taxpayers who have not registered their email address with LHDN will not receive the notification from LHDN on the deferment. To qualify for the deferment, those taxpayers are required to submit an application to firstname.lastname@example.org.
There will be no notification on the deferment from LHDN to CP500 taxpayers as the deferment is automatic for all CP500 taxpayers.
For reference, the FAQs dated 3 December 2021 are available at the following link;
Penalties with regards to Estimate Tax Payable
Failure to furnish Estimate Tax Payable, Form CP204 - liable to a fine ranging from RM200 to RM20,000 or face imprisonment or both. - Section 120 (1) (f)
If fails to pay the monthly tax estimate instalment by the 15th of the month, a late payment penalty of 10% will be imposed on the balance of the tax instalment not paid for the month - Section 107C (9)
If the difference between the actual tax payable and the estimated tax payable is more than 30%, a 10% penalty will be imposed on that difference. - Section 107C (10)
With effect YA 2011 - If form CP204 is not furnished, but the Company has tax payable, such final tax payable shall without any further notice be increased by 10% and that sum shall be recoverable as if it were tax due and payable under the Income Tax Act. - Section 107C (10A)
With effect from the year 2021, we experience that, the LHDN imposed penalties for late submission of CP204 at the rate of 3-5% of the total amount of estimate for that year of assessment even for the 1st time offence.