Monthly or bi-monthly instalments
For new companies, instalment payments must commence in the 6th month of the basis period for the year of assessment, i.e. payable in the 6th month after the company commences operations.
For existing companies, the estimated tax payable must be paid in equal monthly instalment from the second month of the basis period but before 15th of each following month.
A penalty of 10% will be imposed if the balance tax payable is not paid by the due date. An additional penalty of 5% will be imposed on the tax and penalty outstanding if the tax payable and penalty remained unpaid within 60 days from the due date.
However, an application to appeal can be submitted to Inland Revenue Board of Malaysia (IRBM) if the company does not agree with the late payment penalty imposed. This appeal must be made in writing within 30 days from the statement of account. Yet the tax liability need to be paid before any appeal to be made.
CP500 Notis Bayaran Ansuran is also known as Prepayment of Income Tax by Instalment which is issued under subsection 107B(1) of Income Tax Act.
CP500 instalment scheme arises when a taxpayer is having income other than employment such as business, rental and royalties. The taxpayer is required to make a 6 bi-monthly instalment payments, commencing from March. The instalment date will be prescribed in the notice of instalment and the amount to be paid is estimated by IRBM.
If the taxpayer does not satisfy with the amount estimated by IRBM, an application to amend the instalment can be made by filing Form CP502. However, such application must be made before 30th June for relevant year.
Penalty of 10% of the outstanding amount will be charged upon the failure of making payment within 30 days from the due date, i.e. for March instalment, payment must be made before or on 30th March.
Difference between actual tax payable and instalments paid
A comparison between actual tax payable and instalments paid must be made. If there is shortfall (i.e. actual tax payable more than instalment paid), the shortfall must be paid when submitting the Income Tax Return Form (ITRF) in the following year of assessment. If there is overpayment (i.e. instalment paid more than actual tax payable), the overpaid amount will then be returned to taxpayer by claiming tax refund from IRBM.
The tax refund voucher for non-companies must be banked-in within 3 months from the date of cheque. Upon expiry of refund voucher, an application to IRBM to cancel the expired voucher and to request for new voucher or direct bank-in need to be made.
Late payment of instalments
Upon late payment or no payment is made after the due date for both the instalment of company or individual, letter notifying the late payment will be issued by IRBM:
- CP225A – Failure to make payment of CP204 / CP204A / CP205
- CP516X – Failure to make payment of CP500 / CP502