Tax Estimation (CP204)

Every Company must submit CP204 (Tax Estimation)?

LHDNThe Inland Revenue Board (IRB, or common known as LHDN, Lembaga Hasil Dalam Negeri) has issued an notice to all professional associations on 9 June 2011 for the clarification of submission requirements for CP204.

Small & Medium Companies are advised to submit CP204

IRB has in its letter informed all companies to submit its tax estimation (CP204) for avoiding any possible unnecessary penalty due to administrative issues, even though these companies are not required to submit CP204. 

Pursuant to Section 107C(4A) of the Income Tax Act 1967 (ITA), a Malaysian resident company need not submit the estimate of tax payable in a prescribed form for the first two years of assessment in which it first commences operations, provided it is an SME.

SME (stands for Small And Medium Enterprises) are those companies having paid up ordinary share capital of not more than RM2.5 million at the beginning of the two basis periods and that it does not control or is controlled by a related company which has a paid up ordinary share capital of more than RM2.5 million at the beginning of the basis period for a year of assessment.

LHDN may still penalise companies even though they are not required to submit CP204

However, the IRB is unable to identify an SME when:

  1. imposing a penalty on underestimate pursuant to Section 107C(10) ITA 1967.
  2. issuing notification of legal proceedings for offences committed under Section 120(1)(f) ITA 1967.

As such, the IRB has amended the Form CP204 to allow a taxpayer to inform the IRB of its ‘SME’ status without furnishing the estimate of tax payable. A similar amendment is made in the e-Filing Form CP204.

The amendment is effective from 3 March 2011. However, the SME that does not submit a Form CP204 in the first year, is requested to submit a Form CP204 in the second year if it is still an SME.

LHDN informed companies to request their tax agent to appeal the case

Where a penalty under Section 107C(10) is imposed or notification of legal proceedings under Section 120(1)(f) is issued to an SME, please refer to the IRB Branch where the Company income tax returns are maintained, or contact your company’s tax agent to assist on the matter, for waiver of the penalty.

Click here to read: 00710_IRB Letter – Submission requirement for Form CP204

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