Tax Payment of Companies

Instalment Payment CP204

Registered Companies, Limited Liability Partnerships, Trust Bodies and Cooperative Societies which are dormant and/or have not commenced business operation are not required to furnish tax estimate (Form CP204).

For existing companies, the estimated tax payable has to be paid in equal monthly instalments beginning from the second month of the basis period for a year of assessment.

Example:

Number of months within the basis period: 12 months
Tax Estimate: RM 12,000

Monthly Instalments:
RM 12,000/12 months = RM 1,000

For new companies, instalment payments will 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.

All companies are required to pay their monthly instalment by the 15th day of each month.

Balance of Tax Payment

After the actual tax payable of a company been assessed, the balance of tax payable (if any) after deducting total instalments paid on the tax estimate, has to be paid within 7 months from the close of the accounting period or the last day of any allowed extension period.

Penalty Under Instalment Scheme

Penalties in the form of tax increase will be imposed if:

If a company fails to pay the monthly instalment on the tax estimate by the stipulated date, a late payment penalty of 10% will be imposed on the balance of tax instalment not paid for the month.
If the difference between the actual tax payable and the revised estimate or the original estimate of tax payable (if no revised estimate furnished) is more than 30 % of the actual tax payable, a 10% increase will be imposed on that difference.

The formula for calculating the amount of increase is as follows:

AMOUNT OF TAX TO BE INCREASED = [ ( AT – ET ) – ( 30% x AT ) ] x 10%

where:
AT: actual tax payable
ET: revised estimated tax payable or original estimated tax payable (if no revised estimate furnished)

Penalty for Late Payment

If the balance of tax payable is not paid by the due date, a 10% penalty will be imposed on the outstanding amount.

Appeal on Penalty

A company that disagrees with the imposition of late payment penalty may submit a written appeal to the relevant IRBM branch (Collections Unit) within 30 days of the issuance of statement of account.
The company will still be required to pay the tax liability even if an appeal against the assessment is submitted.

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