Estimation of Tax Payable (CP204)
Section 107C of the Income Tax Act 1967 mandates that every company, trust body, or cooperative society must provide an estimate of its tax payable to the Director General of Lembaga Hasil Dalam Negeri (LHDN) for each year of assessment (YA). The following prescribed timelines apply:
Existing company
Furnish CP204 to LHDN not later than thirty (30) days before the beginning of the basis period for the YA.
The estimated tax payable for a YA should not be less than eighty-five per cent (85%) of the latest CP204/CP204A for the immediately preceding YA.
New company
Furnish CP204 to LHDN within three (3) months from the date of commencement of operations.
Late Payment Penalty
Monthly CP204 installments must be settled on or before the 15th of each month. Failure to do so will incur a ten per cent (10%) penalty on the outstanding tax installment amount due and payable after the 15th of each month.
Underestimation of CP204/CP204A
A penalty of ten per cent (10%) will be imposed where the actual tax payable exceeds the CP204/CP204A for the YA by thirty per cent (30%). An example is illustrated below:
Example
ABC Sdn. Bhd. furnish its CP204 for YA2023 at RM20,000. The actual tax computed for YA2023 is RM35,000. The penalty of under-estimation of tax estimation computed as follow:-
[(RM35,000 - RM20,000) - (RM35,000 x 30%)] x 10% = RM450
The penalty for underestimation of tax estimation is RM450.
Newly Incorporated Micro, Small and Medium Enterprises (MSME)
Newly incorporated MSMEs with paid-up ordinary share capital of RM2.5 million or less at the beginning of the basis period for a YA are exempt from furnishing a CP204 estimate for a period of two (2) YAs from the YA in which the company commences operations.
With effective from YA2024, the company with more than twenty per cent (20%) of the paid-up ordinary share capital at the beginning of the basis period for a YA is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia will not qualify for the two (2) YAs exemption. Such companies must submit CP204 to LHDN within three (3) months from the commencement of operations, following the amendment of Section 107C(4B)(d) of the Income Tax Act 1967.
Existing company
Furnish CP204 to LHDN not later than thirty (30) days before the beginning of the basis period for the YA.
The estimated tax payable for a YA should not be less than eighty-five per cent (85%) of the latest CP204/CP204A for the immediately preceding YA.
New company
Furnish CP204 to LHDN within three (3) months from the date of commencement of operations.
Late Payment Penalty
Monthly CP204 installments must be settled on or before the 15th of each month. Failure to do so will incur a ten per cent (10%) penalty on the outstanding tax installment amount due and payable after the 15th of each month.
Underestimation of CP204/CP204A
A penalty of ten per cent (10%) will be imposed where the actual tax payable exceeds the CP204/CP204A for the YA by thirty per cent (30%). An example is illustrated below:
Example
ABC Sdn. Bhd. furnish its CP204 for YA2023 at RM20,000. The actual tax computed for YA2023 is RM35,000. The penalty of under-estimation of tax estimation computed as follow:-
[(RM35,000 - RM20,000) - (RM35,000 x 30%)] x 10% = RM450
The penalty for underestimation of tax estimation is RM450.
Newly Incorporated Micro, Small and Medium Enterprises (MSME)
Newly incorporated MSMEs with paid-up ordinary share capital of RM2.5 million or less at the beginning of the basis period for a YA are exempt from furnishing a CP204 estimate for a period of two (2) YAs from the YA in which the company commences operations.
With effective from YA2024, the company with more than twenty per cent (20%) of the paid-up ordinary share capital at the beginning of the basis period for a YA is directly or indirectly owned by one or more companies incorporated outside Malaysia or by one or more individuals who are not citizens of Malaysia will not qualify for the two (2) YAs exemption. Such companies must submit CP204 to LHDN within three (3) months from the commencement of operations, following the amendment of Section 107C(4B)(d) of the Income Tax Act 1967.
23 Dec 2023
