Updated: Jan 16
Malaysia operates a self-assessment regime.
For tax purposes, companies may adopt their accounting year as the basis period for a year of assessment. Income assessments are made based on the current year. Income tax is chargeable in the year of assessment on the income earned in the basis period for that year of assessment.
A company is taxed on income from all sources (whether business or non-business) arising in the financial year ending in the calendar year that coincides with the year of assessment. For example, companies that close their accounts on 30 June each year are taxed on income earned during the financial year ending 30 June 2020 for the year of assessment 2020.
Companies must submit an estimate of their tax payable no later than 30 days before the beginning of their basis period. Companies which commence operations in a year of assessment have to furnish the estimate of tax payable to the IRBM within 3 months from the date of the commencement of operations.
The company is required to provide an estimate of the tax payable for one year of assessment no later than 30 days before the start of the base period (usually the financial year). However, newly formed companies with a paid-up capital of MYR 2.5 million or less that meet certain conditions are exempted from this condition for two years, starting from the year of assessment in which the company commences operations. All companies may revise their estimate of tax payable in the sixth and/or ninth months of their basis period.
A company that commences operations within one year of assessment is not required to provide an estimate of the tax payable or make installment payments if the base period for the year of assessment in which the company commences operations is less than six months.
Under the self-assessment system, companies are required to submit a return on income within seven months from the date of closing the account. Details to be stated in the statement include the amount of income and taxes payable by the company. The tax return is considered an assessment notification and is deemed to have been submitted to the company on the date the tax return is submitted.
Taxes payable under the assessment after the submission of the tax return are settled and payable on the last day of the seventh month from the closing date of the account.
The estimated tax is payable in 12 equal monthly instalments, starting from the second month of the company's basis / taxable period. Each instalment must be paid to the IRBM by the 15th day of each calendar month beginning in the second month of the basis period. SMEs that begin their operations during a year of assessment are exempt from paying their tax by instalments in the year of assessment in which they commence business and in the immediately following year of assessment. They are required only to settle the tax due when they file their income tax returns.
Any balance of income tax payable, net of instalments paid for the Year of Assessment, must be paid by the due date for the submission of the tax return. In the event of default in payment, a penalty of 10% will be imposed if any balance of tax is not paid by the due date and an additional penalty of 5% is added if any amount remains unpaid more than sixty days after the due date.
Companies must file their income tax returns return (prepared based on audited financial statements as required by Companies Act 2016) within 7 months from the end of their accounting period.
Estimates and revised estimates may only be filed electronically. The tax return must be filed electronically.
Responsibility Of Company
1. Furnish the estimated tax payable (CP204) via e-Filing (e-CP204) or to LHDNM Processing Centre
• New company : 3 months from the date of operation
• Existing company : 30 days before the beginning of new basis year
2. Pay the estimated tax payable by using CP207 on / before the 10th day of every month:
• New company : from the 6th month of the basis period
• Existing company : from the 2nd month of the basis period
3. Furnish Form C via e-Filing (e-C) or to LHDNM Processing Centre (Declare income and calculate tax payable)
4. Furnish Form R (Statement of Revised 108 Balance) via e-Filing (e-R) or to LHDNM Processing Centre
5. Pay the balance of tax payable (if any) by using CP207
Statute of limitations
Additional assessments can be made within five years after the end of the relevant assessment year. This time limit does not apply in the event of fraud, intentional default, or negligence.
If you would like to know more, please contact Bestar.