Under self-assessment system, every company is required to determine and submit in a prescribed form (Form e-CP204) an estimate of its tax payable for a year of assessment, 30 days before the beginning of the basis period [S 107C(2)].
Pursuant to Section 107C(3) of the Income Tax Act 1967 (ITA), the estimated tax payable of following year of assessment shall not be less than 85% of the revised estimate of tax payable for the preceding year of assessment or if no revised estimate is furnished, 85% of the estimate of tax payable for the preceding year of assessment.
For newly commence non-SME, the companies are required to submit the CP204 within 3 months from the date of commencement. ing years:
However, there is exceptional for newly commence SME. An exemption is given where the SME is not required to furnish the CP204 for follow
- For newly commence non-SME, the companies are required to submit the CP204 within 3 months from the date of commencement.
- However, there is exceptional for newly commence SME. An exemption is given where the SME is not required to furnish the CP204 for following years:
- The year of assessment in which the SME commences its business activity; and
- The immediate 2 following years of assessment.
For example, a SME with financial year end of 31st December 2018 commences its business on 7th February 2018, the exemption to furnish such estimation of tax payable will be YA 2018, YA 2019 and YA 2020.
Pursuing to Section 107C(7) of the Income Tax Act, 1967, a company is given chances to revise the estimated tax payable in the 6th or/and 9th month of basis period using CP204A form.
Also, the Inland Revenue Board of Malaysia (IRBM) informed that under the provision of subsection 107C (1A) of the Income Tax Act 1967 (ITA 1967), it is mandatory for companies to furnish Form CP204 (Estimate of Tax Payable) and CP204A (Revised Estimate of Tax Payable) via e-Filing with effect from the Year of Assessment 2018.
Where the tax payable under an assessment exceeds the estimate or revised estimate of tax payable as the case may be, by an amount greater than 30% of the tax payable under an assessment, a penalty of 10% is payable on the excess over 30% of the tax payable under the assessment. The IRB has informed that the said penalty should be paid on or before the due date for filing of the company’s tax return Form C, i.e. on or before 7 months after the company financial year end.
Where a company fails to furnish an estimate or provides an estimate lower than 85% of the estimate or revised estimate of tax payable for the following year of assessment, the company will be liable to prosecution, upon conviction to a fine ranging from RM200 to RM2,000 or to an imprisonment for a term of 6 months or both. With effect from YA 2011, where no prosecution is instituted by the Director General and no direction is issued by the Director General under S 107C(8) of the ITA 1967, but there is a tax payable by that company for that year of assessment for which that amount of tax payable will be subject to a penalty of 10%. In addition, the Director General (DG) is empowered to direct payment on account of tax which is or may be payable by instalments.
When there is a change in accounting period, the company has to notify IRBM on the changes using the Form CP204B.
In the case where such change is notified in the sixth or ninth month of the basis period for that year of assessment, Form CP204A should be furnished together with the notification (Form CP204B).
Where the accounting period is shortened, the revised tax estimate made must not be lower than the original instalment and the notification must be made before the end of the basis period. If otherwise, the revised estimate will be rejected and the original instalment will be continue until the date of notification of the change in accounting period is received by Director General of Inland Revenue (DGIR).
Where the accounting period is extended, the monthly instalment shall not be lesser than the monthly instalment for the original accounting period.