CP204: Company Tax Estimates, CP204A Revisions & the 30% Rule

Who files a CP204, and by when

The obligation applies to companies, limited liability partnerships, trust bodies and co-operative societies — not to individuals, who fall under the separate CP500 regime. The estimate must be furnished no later than 30 days before the beginning of the basis period for that year of assessment. For a company with a 31 December year end, that means the CP204 for the following year is due by 30 November, while the current year is still running.

Submission is electronic. Companies file e-CP204 through the MyTax portal at mytax.hasil.gov.my; paper forms are not accepted. The estimate is a figure for tax, not for profit — you work out expected chargeable income, apply the company rates, and declare the resulting tax.

A company that has just commenced operations has a different deadline: the CP204 is due within three months of the date operations began, and no estimate is required at all if the first basis period is shorter than six months.

The 85% minimum — you cannot simply estimate zero

Section 107C(3) caps how low the estimate can go. The CP204 for a year of assessment must not be less than 85% of the revised estimate for the immediately preceding year — or, where there was no revision, 85% of the original estimate for that year. The floor is tied to last year's estimate, not to last year's actual tax, so a company that over-estimated once drags that number forward until it revises.

If the previous year's revised estimate was RM200,000, the lowest CP204 the system will accept for this year is RM170,000. A genuinely collapsing business cannot fix that at the filing stage — it has to file the minimum and then bring it down through a revision in the 6th or 9th month.

Monthly instalments: CP207 and the 15th of the month

The estimate is divided into twelve equal monthly instalments. For an existing company they start in the second month of the basis period; for a company in its first year of operations they start in the sixth month. Each instalment is due by the 15th day of the month, paid using the CP207 reference through ByrHASiL or an appointed bank.

• An instalment paid late attracts a 10% penalty on the unpaid amount under Section 107C(9), imposed automatically once the date passes.
• Quote the correct payment code. Instalments credited to the wrong payment type are a recurring cause of a company appearing to be in arrears while the money sits elsewhere in its tax account — check the MyTax ledger after the first payment of each year.
• The instalments are payments on account, not a final tax. They are set off against the tax assessed on the Form C.

Revising the estimate: CP204A in the 6th and 9th month

A company may revise its estimate twice, using Form CP204A filed electronically: once in the sixth month of the basis period, and once in the ninth month. For a 31 December year end that means June and September. Outside those two windows there is no right to revise, however obviously wrong the original figure has become.

When an estimate is revised upward, the remaining instalments are recalculated so that the increase is spread over the months left in the year. Where the revision happens late and the increase is large, the catch-up instalments can be uncomfortable — which is an argument for using the sixth-month window rather than waiting for the ninth.

When it is revised downward, the balance already paid may exceed the new estimate. The excess is not refunded mid-year; it stays as a credit and is set off at assessment.

• Treat the sixth month as a real management-accounts checkpoint, not a formality. Half the year is known by then and the remaining instalments can still absorb a correction.
• LHDN has in some years allowed an additional revision in the eleventh month as a temporary measure. That is announced year by year and is not part of the standing law — confirm the current position before relying on it.
• A company that ceases operations still has to deal with the outstanding instalments; they do not lapse on their own.

The 30% rule and the 10% under-estimation penalty

This is where the money is lost. Under Section 107C(10), if the tax payable on the assessment exceeds the revised estimate (or the original estimate where there was no revision) by more than 30% of the tax payable, the amount of that excess over the 30% threshold is penalised at 10%.

Worked example. A company estimated RM100,000 and never revised it. Its Form C shows tax payable of RM180,000. Thirty per cent of RM180,000 is RM54,000, so the permitted shortfall is RM54,000 and the tolerated estimate is RM154,000. The actual tax exceeds that by RM26,000, and the penalty is 10% of RM26,000 — RM2,600, on top of the RM80,000 of tax still owing.

• The comparison is against the latest revised estimate. A sixth or ninth month revision that brings the estimate close to reality removes the penalty exposure entirely — the revision is the defence.
• A good year is therefore more dangerous than a bad one. Profit that arrives in the final quarter, after the ninth-month window has closed, cannot be covered by a revision and the penalty follows almost automatically.
• The penalty is on the under-estimation. It is separate from, and additional to, the late-payment penalty on the balance of tax itself.

The two-year exemption for new SME companies

Section 107C(4A) exempts a qualifying new company from furnishing a CP204 and from paying instalments for its first two years of assessment, beginning with the year it commences operations. To qualify it must have paid-up ordinary share capital of RM2.5 million or less at the start of the basis period and gross business income not exceeding RM50 million, and it must meet the same related-company and shareholding conditions that govern the SME rates generally.

The exemption removes the instalments, not the tax. Nothing is being collected during those two years, so the entire liability lands as a single balance due with the Form C. New companies that treat the exemption as a holiday rather than as a cash-flow obligation to provide for are the ones that find themselves short in month seven.

Balance of tax, Form C and the usual traps

• The Form C and the balance of tax are both due within seven months after the close of the financial year — 31 July for a 31 December year end. The balance is the assessed tax less the instalments already paid.
• A late balance attracts a 10% increase under Section 103. Paying the instalments diligently does not protect the balance.
• Changing the financial year end changes the basis period, and the instalment schedule has to be reworked with LHDN rather than simply continuing. Notify before the change takes effect.
• Estimate from management accounts, not from last year. The 85% floor sets the minimum, but the 30% rule is tested against actual results — a figure that merely clears the floor is not necessarily a safe estimate.
• Diarise four dates every year: the CP204 filing date, the sixth-month revision, the ninth-month revision, and the Form C deadline. Three of them fall while the year is still running.

Important caveats

This guide describes the Section 107C estimate regime for companies, LLPs, trust bodies and co-operative societies. Individuals with business or rental income fall under the separate Section 107B CP500 scheme, with bi-monthly instalments and a different revision form and deadline; the two sets of rules are not interchangeable.

Deadlines, forms, penalty rates and the conditions attaching to the new-company exemption are set by law and by LHDN operational practice, and have been varied by temporary measures more than once. The worked example illustrates the arithmetic of the 30% rule, not any particular company's liability. Confirm the current position at hasil.gov.my and in your MyTax account, and work with a licensed tax agent where the estimate or the penalty at stake is material.