Corporate Tax Compliance
Rising Global Consultants
Corporate Tax Compliance & Planning Services
Corporate tax compliance and planning services are crucial in Malaysia as corporations are responsible for calculating and filing their tax obligations under the self-assessment regime, rather than being dealt with directly by the Inland Revenue Board of Malaysia (IRB). Although the IRB does not scrutinize tax returns in detail, these returns still form the basis of the taxpayer’s self-assessment. Failure to comply with tax regulations can lead to financial risks such as penalties and increased tax liabilities, as well as potentially damaging the reputation of the business.
To avoid these risks, businesses should focus on their core business, and a more cost-effective solution can be achieved by leaving tax compliance and planning to a professional advisor, such as Rising Capital Professional advisors not only ensure that your tax filings are accurate and compliant, but also provide services to optimize tax strategies and mitigate risks, helping your business stay competitive and improve operational efficiency
Tax planning
Tax planning is the process of looking at the available tax options to determine how a company should conduct its business transactions to eliminate or minimize taxes
Below are some indications that a company can consider when planning for taxes, depending on the company’s tax situation
- Report director's salary: Can save tax by planning tax affairs based on effective tax rates.
- Understand tax deductions: Clarify allowable and non-allowable tax expenses.
- Debt financing: Consider using debt financing rather than equity financing, as interest on business loans is tax-deductible.
- Write off overdue debt: Review unpaid debts and write off uncollectible overdue debts.
- Write off obsolete inventory: Review obsolete inventory and write it off.
- Pay annual bonuses: Pay annual bonuses to employees and ensure the amount is confirmed before the end of the year to generate expenses.
- Reassess accounts: Look for missed accrued expenses.
- Defer taxable income: If corporate tax rates decrease, defer income to the next tax year to save on taxes and increase cash flow.
- Carry forward tax deductions: Carry forward tax deductions from the previous period to reduce taxable amount.
- Company vehicles: Apply for capital reduction and reimburse business vehicle expenses, and it is recommended to keep records of business and personal use.
- Tax-exempt subsidies: Interest subsidies on employee housing, education, or car loans not exceeding RM 300,000 are tax-exempt.
- Pension: Eligible pension recipients are tax-exempt.
Unabsorbed capital relief can also be carried forward indefinitely and used to offset income from the same source of business. Capital relief carried forward when the company is dormant is subject to the shareholder continuity test.
Through the Block Relief Program, a Malaysian company may deduct 70% of its adjusted business loss for the year (on a case-by-case basis) from the gross income of the other company.
For small and medium-sized enterprises, the first 600,000 MYR of taxable income is taxed at 17%, and any amount exceeding this is taxed at 24%. Personal tax rates may result in lower tax burdens.
No advance tax payments are required for the first two years; taxes are only paid when filing. This helps improve cash flow. Accurately estimate tax liabilities to avoid penalties for underestimation.
Companies can submit a revised estimate CP 204A in the sixth or ninth month of the assessment year. Apply for tax incentives, such as MSC status. Retain transaction documents for 7 years for tax audits. Optimize tax deductions by starting early; expenses incurred before business commencement are generally non-deductible. Consider withholding tax implications when making payments to non-residents.
Submit the annual income tax return package contents
Prepare/review tax calculations to assess the company's tax position
Complete tax return forms – C / C1 / PT / TA / TC / TR or TN.
Complete the tax estimate form (CP204) / revise the company income tax estimate form (CP204A).
Prepare worksheets and appendices as supporting documents for the tax return.
Provide advice on paying the remaining tax balance (if any) based on the submitted tax return.
Timely remind of tax filing deadlines (via email and phone).
Review tax position to maximize tax benefits (if applicable).
Timely update on changes in tax laws and their impact on the business.
Form CP204
Estimate of taxable income in Malaysia
Since the 2008 assessment year, newly operating SMEs are not required to provide an estimate of payable taxes for that assessment year or for the first two years of operation
From the 2014 assessment year, newly operating SMEs without a baseline period for the assessment year and the following year are not required to provide an estimate of payable taxes for the current year and the next 2 years
Under the self-assessment system, every company must determine and submit an estimate of payable taxes for the year in the prescribed form (Form CP204) 30 days before the start of the baseline period. However, when a company begins operations for the first time (i.e., during the first baseline period), the estimate of payable taxes must be submitted to the Inland Revenue Board within three months from the start of business, and no later than 30 days before the start of the baseline period
Since the 2009 assessment year, the definition of SMEs has been redefined as Malaysian resident companies with paid-up capital of 2.5 million MYR or below in ordinary shares at the start of the assessment year baseline period
- No more than 50% of the company’s paid-up ordinary share capital is directly or indirectly owned by related companies
- No more than 50% of the paid-up ordinary share capital of related companies is directly or indirectly owned by the company first mentioned
- No more than 50% of the paid-up capital of the ordinary shares of the company first mentioned and related companies is directly or indirectly owned by another company
- At the start of the assessment year baseline period, no more than 20% of the company’s paid-up ordinary share capital is directly or indirectly owned by one or more foreign-registered companies or one or more non-Malaysian citizens
In this case, “related companies” refers to companies with paid-up ordinary share capital exceeding 2.5 million MYR at the start of the assessment year baseline period.
Note that the estimated payable tax for a tax year must not be less than (or at least 85%) of the revised estimate of payable tax for the previous tax year, or if no revised estimate is provided, it should be based on the payable tax of the previous year
Submit the revised estimate of payable tax – CP 204A.
A company can submit Form CP 204A to revise the estimate of payable taxes in the sixth and/or ninth month of the baseline period.
Please note that if the payable tax for a specific tax year exceeds the estimated payable tax, then 30% of the amount exceeding the final assessment payable tax will not be notified separately. The difference between this amount and 30% of the final assessment payable tax should be increased by an amount equivalent to 10% of the difference, and this amount may be collected as overdue tax under the provisions of this Act.
If the company does not provide an estimate, the final payable amount will be increased by an amount equivalent to 10% of the payable tax, and this amount may be collected as overdue tax under the provisions of this Act.
The difference between the submitted estimated tax amount and the final payable tax amount
When the payable tax for a specific tax year exceeds the original or revised estimate (if a revision was submitted), a penalty of 10% will be imposed on the amount exceeding 30% of the payable tax.
For example, if the final payable tax amount is RM 1,000,000 and the estimated tax amount is RM 300,000:
| Final payable tax amount Less: Estimated tax amount | 1,000,000 300,000 |
| Less: 30% of the payable tax amount | —————– 700,000 300,000 |
| Difference | —————– 400,000 ========== |
| The difference will be subject to a 10% penalty. | 40,000 ========== |
Failure to provide an estimate of payable taxes
Any company failing to submit an estimate of payable taxes for a year without reasonable cause is guilty of an offense and, upon conviction, may be fined between 200 MYR and 2,000 MYR, or imprisoned for up to six months, or both.
From the 2011 assessment year onwards, if the director does not file a prosecution or issue a directive but the company is required to pay taxes for that assessment year, a 10% penalty will be imposed on the payable tax amount.
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Phone Number: +60 3-8682 1802 | E-mail: officer@rising.com.my