Tax Estimate & CP204 requirements

What is Tax Estimation

Based on estimated company profit, a company that has just begun their operation shall estimate their tax payable for the first year of assessment. This estimated tax payable will be the benchmark for the next year of assessment of the company.

What is CP204 Form

CP204 Form is a prescribed form of a company’s tax payable for a year of assessment and companies are required to estimate and submit this form to Inland Revenue Board (IRB) or Lembaga Hasil Dalam Negeri (LHDN) Malaysia.

It is important to note that a new company must submit CP204 Form within 3 months after their business is incorporated. However, for existing companies are required to submit estimation of tax payable form by 30 days before the beginning of the basis period of assessment.

Additional information

  • It is not a requirement for SME to submit the estimate of tax payable or make instalment payments within the first 2 years of assessment.
  • However, to notify the LHDN of the SME status, SME are advised to submit their estimated tax payable within the datelines even though the estimated tax amounting to zero, to avoid unnecessary penalty.
  • If a SME received a penalty under Section 107C or a notification of legal proceedings under Section 120 is issued, the company can refer to the nearest LHDN branch where the company income tax returns are maintained to waive the penalty. However, the waiver is subject to approval.
  • The monthly instalment of estimated tax should be paid not later than the 15th of each month.

When to submit your cP204 Form 

New company

Your company was incorporated on 25/02/2021. The start date of operation is on 1/04/2021 and the first financial accounts were prepared up to the date of 31/12/2022.

Hence, you need to submit CP204 form not later than 30/06/2021 (3 months from the start date of operation). 

Existing company

The basis period of your company is from 1/07/2021 to 30/06/2022 for the year of assessment 2022.

Hence, you need to submit CP204 form not later than 31/05/2021 (30 days before the beginning of the basis period). 

Submission of CP204 Form within the stipulated time

If you wish to revise the estimate of tax payable, you need to use a prescribed form of CP204A on the 6th and the 9th of the basis period.

However, if you plan to revise your company tax other than 6th and 9th month of the basis period, you must submit an appeal letter to LHDN (subject to approval).

Important to note that the estimate of tax payable of the current year cannot be less than 85% of the revised estimate tax payable for the following year of assessment

If there is no revised estimate tax submitted, the current year tax estimate should be more or at least 85% of the estimated tax payable for the preceding year of assessment.

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.

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