Updated FAQs - 11th month revision and deferment of CP204/CP500 payments

Updated FAQs on the revision of estimate of tax payable in the 11th month of the basis period and the deferment of CP204 and CP500 payments

The IRB has published on its website the updated version of its FAQs document on the revision of estimate of tax payable in the 11th month of the basis period and the deferment of payments of the estimated tax payable (CP204) and instalment scheme (CP500), dated 3 December 2021. The FAQs are in Bahasa Malaysia, titled “Pindaan Anggaran Cukai Kena Dibayar (CP204) Pada Bulan Ke-11 Tempoh Asas Bagi Tahun Taksiran 2021 Dan 2022 Dan Penangguhan Bayaran CP204 Dan Skim Bayaran Ansuran (CP500) Bagi Perusahaan Mikro Kecil Dan Sederhana (PMKS) Mulai 1 Januari 2022 Hingga 30 Jun 2022 Di Bawah Bajet 2022”. 

Some of the key changes to the FAQs are highlighted below:

• Part A – Question 7

The updated FAQs now stipulate that for the purpose of assessing the underestimation penalty under Section 107C(10) of the ITA,
the 11th month revision will be taken into consideration.

Previously, the FAQs stated that if the company’s final tax liability per the tax return exceeded the revised estimate of tax payable in the sixth or ninth month of the basis period by more than 30% of the final tax, the amount in excess of 30% will be subject to a 10% penalty – this did not appear logical as the 11th month revision was not taken into account. 

• Part A – Question 8

 The updated FAQs now state that the initial estimate of tax payable for YA 2022 and YA 2023 must be at least 85% of the latest revised estimate of tax payable.

Previously, the FAQs stated that the initial estimate of tax payable for YA 2022 must not be less than 85% of the initial or revised estimate of tax payable in the sixth or ninth month of the basis period for YA 2021.

The FAQ response is not consistent with the provisions of Section 107C(3) of the ITA, read together with the definition of “revised estimate” in Section 107C(12). This FAQ response may also not be implementable for entities adopting a 31 December financial year-end, which had submitted their initial estimate of tax payable for YA 2022 by 30 November 2021 and had then made an “11th month” revision to their YA 2021 tax payable by 10 December 2021, i.e., within the special extended deadline provided by the IRB. Clarification is being sought from the IRB on this point.

• Part A – Question 10

Previously, the FAQs stated that where the 11th month of a company’s basis period falls in October, November or December 2022, the “11th month” revision must be submitted to the IRB before 31 October 2022. 

Based on the updated FAQs, the concession would now only apply to a company where the 11th month of the basis period falls in November 2022. The “11th month” revision would not apply where the companies’ 11th month of the basis period falls in December 2022. 

• Part B – Question 2

The updated FAQs clarify that a limited liability partnership (LLP) is also eligible for the deferment of CP204 instalment payments. The LLP must have:

         -   Total capital contribution (in cash or in kind) of RM2.5 million or less at the beginning of the basis period, and

         -    Gross income from business sources of not more than RM50 million for the relevant YA

• Part B – Questions 10 and 11

The updated FAQs clarify that the following taxpayers will not receive a notification from the IRB on the deferment of their CP204 payments, even if they are eligible:

        -   A taxpayer who is eligible for the deferment based on his current microenterprises and small and medium enterprises (MSME) status, but did not qualify previously, and

       -     Taxpayers who have not registered their e-mail addresses with the IRB.

To qualify for the deferment, such taxpayers will be required to submit an application to penangguhancp204@hasil.gov.my.

This is essential to ensure that the IRB’s records are updated and that the increase in taxes under Section 107C(9) of the ITA is not imposed.

For reference, the FAQs are available at the following link:

Pindaan Anggaran Cukai Kena Dibayar (CP204) Pada Bulan Ke-11 Tempoh Asas Bagi Tahun Taksiran 2021 Dan 2022 Dan Penangguhan Bayaran CP204 Dan Skim Bayaran Ansuran (CP500) Bagi Perusahaan Mikro Kecil Dan Sederhana (PMKS) Mulai 1 Januari 2022 Hingga 30 Jun 2022 Di Bawah Bajet 2022