TAX ESTIMATE-CP204

Guidelines on Submission of Tax Estimate in Malaysia via Form CP204 -

includes Budget 2022 updates

1.Submission of tax estimates in Malaysia is mandatory under Section 107C of the Malaysian Income
Tax Act, 1967.

2.The prescribed form for initial submission is Form CP204 and for revision of the initial submission
is Form CP204A.

3. 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

1.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.

bhd
2. For newly incorporated Companies, the estimated tax payable must be submitted within 3 months
from the date of commencement of its business.

Special Condition: Sdn Bhd

SME (company with paid-up capital of MYR 2.5 million or less) 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.

Monthly Instalment of Submission CP204

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?

1. By using the prescribed form CP204A on the 6th and 9th month of the basis period.

2. Any revision other than the above months required an appeal letter, subject to LHDN approval.

3.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.

4.LHDN will issue a revised instalment payment schedule (CP205) as a notification.

5.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.

Penalties with regards to Estimate Tax Payable

1.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)

2.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)

3.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)

4.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)

5.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.

Note:
BHD Versus SDN BHD companies are typically small or midsized
enterprises (SME) while BHD companies are the largest
companies in Malaysia.
 Submission of revised estimate of tax payable – CP 204A
The Company can submit the CP 204A to revise the estimate of tax payable in the sixth
or/and ninth month of the basis period.
Kindly remind that where the tax payable for a particular year of assessment exceeds
the estimate of tax payable, by an amount of more than thirty per cent (30%) of the tax
payable under the final assessment, then, without any further notice being served, the
difference between that amount and thirty per cent (30%) of the tax payable under the
final assessment shall be increased by a sum equal to ten per cent (10%) of the amount
of that difference, and that sum shall be recoverable as if it were tax due and payable
under this Act.
If there is no estimate is furnished by a company, such final tax payable shall without any
further notice be increased by a sum equal to ten per cent of the tax payable and that sum
shall be recoverable as if it were tax due and payable under the Income Tax Act.

Difference between the estimate submitted and final tax payable

When the tax payable for a particular year of assessment exceeds the original or the revised
estimate (if a revision is submitted) by an amount exceeding 30% of the tax payable, the
difference will be subject to a penalty of 10%.
Eg. Final Tax payable = RM 1,000,000, ETP = RM 300,000

RM
Final Tax payable 1,000,000
Less : ETP 300,000
—————–
700,000
Less : 30% Tax Payable 300,000
—————–
Difference 400,000
==========
Penalty on the difference (10%) 40,000
==========

Failure to furnish estimate of tax payable

Any company which, without reasonable excuse fails to submit the estimate of tax payable for
a year of assessment shall be guilty of an offence and upon conviction, be liable to a fine
ranging from RM200 to RM20,000 or face imprisonment for a term not exceeding six months
or both.
With effect from Y/A 2011, where no prosecution is instituted by the Director General and no
direction is issued by the Director General but there is a tax payable by that company for that
year of assessment, such amount of tax payable will be subject to a penalty of 10%.