Know the Process of Tax Estimate Submission in Malaysia Using Form CP204
The tax estimation submission in Malaysia under Section 107C of the Malaysian Income Tax Act, 1967. The recommended form of the first submission is Form CP204 and revising the Form CP204A initial submission.
What is the Proper Way to Submit the Tax Payable Estimation?
By using the prescribed form CP204
CP204 Due Date of the Submission + Monthly Instalment based on Form CP205
- The company must determine and submit the tax payable estimation for an assessment year through Form CP204. This should be beyond 30 days before the basis period starts.
- For companies that were newly incorporated, the tax payable estimate must be given within 3 months. This begins from the commencement date of the business.
- The SME has no requirement to pass a tax payable estimation or make payment instalments for 2 years. This starts from when the company has commenced operations.
- The estimated tax monthly instalment can be paid not later than the 15th of every month.
LHDN’s Statement Through a Letter on CP204 for SMEs
- The LHDN has given their statements. More than that, companies must submit their estimated tax payable using the Form CP204. Telling the LHDN about its SME status using only a ZERO tax payable amount to avoid unnecessary penalties because of administrative issues. This is regardless if these companies do not have to submit CP204.
- If the penalty under Section 107C has been imposed or legal proceedings were notified under Section 120 has been issued to an SME, you can use the LHDN Branch. It must be where the income tax returns of the company are kept for the penalty waiver.
What is an SME?
They are Small and Medium-Sized Enterprises (SME) that have paid-up share capital of RM2.5 million maximum at the start of the basis periods. That cannot be controlled by a related company that has paid-up ordinary share capital of above RM2.5 million at the start of the assessment year basis period.
How Tax Payable Estimation is Revised and When
- When form CP204 is used on the basis period’s 6th and 9th month.
- Any revision aside from those months needs a letter of appeal, which is subject to the approval of LHDN.
- Revised estimation of the assessment year’s tax payable must not be less than 85% of the tax payable estimation (CP204) or tax payable estimation (CP204) that was furnished for the quick assessment year preceding.
- Application for tax estimation that is less than 85% of the prior estimation or revised estimate, an appeal letter for the lower estimate. It needs supporting documents that need to be submitted to the LHDN in Pusat Pemprosesan Maklumat.
Penalties Applied to the Tax Payable Estimation
- Not finishing the Estimate Tax Payable Form CP204 will incur a fine that ranges from RM200 to RM2,000, imprisonment, or both.
- Not paying the monthly estimation of tax instalment on the 15th of that month has penalties. It will have a 10% penalty on the tax balance instalment that was not paid that month.
- If the tax payable and estimation difference goes over 30%, there will be a 10% penalty.
- Failure to furnish form CP204, but the company incurs a tax payable, this final tax payable will be increased by 10%. The sum will be recoverable as the tax due date and payable based on the Income Tax Act.
Disclaimer
This is a piece of tax information issued by malaysiataxation.com. We make no representations or guarantee about the accuracy, suitability, reliability or completeness of this information for any purpose while every care has been taken in compiling this information. Malaysia Taxation, its agents and employees accept no responsibility, and disclaim all accountability, for the consequences of anyone acting, or refraining from working, in reliance on the information contained in this book or for any conclusion based on it. Recipients shouldn’t act upon it without seeking specific advice tailored to your circumstances, requirements, or needs.
