Corporate tax is charged to the resident company (Sendirian Berhad and Berhad a.k.a. private limited and public limited) receiving income:
- In Malaysia; and
- Outside Malaysia for companies carrying out insurance, sea transportation, air transportation, or banking businesses.
Estimate of The Tax Payable
With effect from the year of assessment 2006, the estimate of tax payable for a current year by the company should not be less than 85% of the revised estimate of tax payable for the immediate preceding year of assessment. If there is no revised estimate furnished, current year tax estimate should not be less than 85% of the estimated tax payable for the immediate preceding year of assessment.
A company which has just commenced business can estimate the tax payable for the first year of assessment based on estimated company profits. The estimated tax payable for the first year will be the basis for the tax estimate for the next year of assessment.
Submission of Tax Estimation (CP204 Form)
An existing company is required to furnish estimation of tax payable not later than 30 days before the beginning of the basis period for a year of assessment. However, a company that has just commenced business has to furnish the estimate of tax payable within 3 months from the date the company commences business.
Exemption from Filing Tax Return
Circumstances to Apply for Exemption from Filing Tax Return are as follows:
- Company has temporarily or permanently ceased its operation
- Company is currently under liquidation or under court order.
For existing companies, the estimated tax payable has to be paid in equal monthly installments beginning from the second month of the basis period for a year of assessment.
For new companies, installment 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. A company is required to pay the installment of the estimated tax by the 15th day of each month.
When a company has determined its actual tax payable, balance of tax which is the actual tax payable after deducting total installments on the tax estimate, has to be paid within 7 months from the close of the accounting period using the CP207 Form payment slip which is provided together with the C Form to make payment.
If the difference between the actual tax payable and the estimated tax payable (if the revised estimate is not furnished) is more than 30 % of the actual tax payable, a 10% increase in tax will be imposed on that difference.
If a company fails to pay the monthly installment on the tax estimate by the stipulated date, a late payment penalty of 10% will be imposed on the balance of tax installment not paid for the month.