1.1	Record keeping

Companies have to maintain a good record keeping system. This will help in verifying any claims made should the IRB require them to be produced.

1.2	Voluntary compliance

Taxpayers have to determine their correct tax liability and make payments promptly. That does not mean that the IRB would not examine the return forms at all. A certain percentage of the return forms will be audited. It is very likely that IRB will audit those returns with a high probability of under declaration of taxable income or tax payable and those that are inherently of high risks to revenue.

1.3	Getting up-to-date

The Self Assessment System for companies will start in year 2001. However for companies that close their accounts at the beginning of the year, Self Assessment will be implemented very soon. If companies are not clear of their tax position under the new system, do not hesitate to contact the nearest IRB office or their tax advisors.

The Self Assessment System for companies where companies are required to determine their own tax liability and make payment of tax to the IRB is as follows:

All companies are required to furnish to the DGIR an estimate of its tax payable for a year of assessment. This includes companies that expect no tax to be paid for that year of Assessment.

2.1	Furnish an estimate

Under the Self Assessment System, every company is required to furnish an estimate of its tax payable in a prescribed form (CP. 204) to IRB. This prescribed form has to be submitted to IRB not later than 30 days before the beginning of the basis period.

Example 1: Company ABC Sdn. Bhd. Makes up its accounts from 1.7.2000 to 30/6/2001. The prescribed form must be submitted to IRB before 1/6/2000. However, in respect of a company that has just commenced operations, the estimate of tax payable for the current year may be furnishing within 3 months from the date of commencement of operations. Example 2: Company DEF Sdn Bhd. Commences operations on 1/4/2000 and makes up its first accounts of 12 months to 31/3/2001. The estimate of tax payable for year 2001 must be furnishing to IRB by 30/6/2000.

The prescribed form for furnishing an estimate will be issued by IRB to companies. In the event that companies did not receive the form, these forms are also available at all IRB offices. Upon completion of CP 204, it should be sent back to: Inland Revenue Board Pusat Pemprosesan (Bahagian Operasi) Karung Berkunci 11055 50990 Kuala Lumpur In General, the following information is required:

Name and address of the company. Income tax file reference number. Company registration number. Indication of whether original or revised estimate. Accounting period. Date of commencement of operation (for new companies). The relevant year of assessment. The estimated amount of tax payable for the year of assessment.

2.2	The estimated amount of tax payable for the year of assessment.

Generally, the estimate of the tax payable for a current year by the company should not be less than the estimate of tax to be paid for the immediate preceding year of assessment. Notwithstanding the above, it is specifically provided that for the Year of Assessment 2001, the estimate of tax payable furnished to the Director General of Inland Revenue (DGIR) shall not be less than the amount of tax payable for the Year of Assessment 1999. Upon receiving the completed CP 204 furnished by the company, IRB will then issue Notice of Installment Payment (CP205).

Example 3: ABC Sdn. Bhd.'s estimated tax payable for the year of assessment 2001 is RM8,000 (the tax payable for the year of assessment 1999 is RM6,000). For the year of assessment 2002 the company's estimated tax payable must be at least equal to RM8,000. In the sixth month of the basis period, the company submits a revised estimated tax payable for the year of assessment 2002 showing a nil tax payable. For the year of assessment 2003 the estimated tax payable can be NIL or any other amount according to the company's estimate Example 3 can be summarised as follows:

Assessment Year	Estimated Tax Payable
	Original	Revised
2001	RM8,000 (YA 1999 tax payable Is RM6,000)	No revision is made
2002	RM8,000 (minimum RM8,000)	Nil tax payable
2003	Nil tax payable	RM6,000

2.3	Can the estimate of tax be amended?

The company is allowed to revise its original estimate as furnishing, in the sixth month of the basis period for a year of assessment. Following from this, the remaining installments have to be revised accordingly. The application for revision can be done using the same prescribed form (CP204) but indicating that it is to provide a "revised estimate". A Notice of Revised Installment Payment (CP206) will be issued by IRB to confirm installment payments following the revised estimate.

2.4	Penalty for Understatement of the Estimated Tax Payable

2.4.1

How will the company be subject to this penalty? If the difference between the actual tax payable and the revised Estimated tax payable or the estimated tax payable (if not revised Estimate is furnished) is more than 30 % of the actual tax payable, a 10% increase in tax will be imposed on that difference in excess of the 30%.

2.4.

Formula for calculating the penalty The formula for calculating the amount of tax to be increased is as follows: Amount of tax to be increased = {(AT-ET) – (30% x AT)} x 10% here: AT: actual tax payable ET: revised estimated tax payable or estimated tax payable (if no revised estimate is furnished) Example 4: Following from Example 3 the actual tax payable for the relevant years of assessment are as follows:

Year of Assessment	Estimated Tax Payable (RM)	Actual Tax Payable (RM)	Difference Between Actual & Estimate (RM)	30 % x Actual Tax Payable (RM)
2001	8,000	9,000	1,000	2,700
2002	0 Revised	2,400	2,400	720
2003	6,000 Revised	8,000	2,000	2,400

In this example the company will only be subject to penalty for underestimating its tax payable for the year of assessment 2002. This is because the difference between the actual and the revised estimated tax payable of RM2,400 exceeds 30% of the actual tax payable (i.e. RM720). The calculation of the penalty is as follows: Actual tax payable: RM2,400 Estimated tax payable: Nil Amount of tax to be increased: = [(2,400 - 0) - (30% x 2,400)] x 10% = [(2,400) - (720)] x 10% = 1680 x 10% = RM168

2.5	What happens if a company fails to furnish an estimate?

If a company fails to furnish an estimate by the required date, the DGIR will issue a direction to the company to make installment payment. The DGIR may also institute legal proceeding against the company for the failure to furnish an estimate.

Jadual 1: Pengemukaan Anggaran, Pindaan Anggaran dan Bayaran Ansuran

Accounts Year Ending	Estimate Furnished to IRB before	Variation of Estimate in month of	Commencement of Monthly Installments
31/01/2002 28/02/2002 31/03/2002 30/04/2002 31/05/2002 30/06/2002 31/07/2002 31/08/2002 30/09/2002 31/10/2002 30/11/2002 31/12/2002	01/01/2001 01/02/2001 01/03/2001 01/04/2001 01/05/2001 01/06/2001 01/07/2001 01/08/2001 01/09/2001 01/10/2001 01/11/2001 01/12/2001	July2001 August 2001 Sept. 2001 Oct. 2001 Nov. 2001 Dec. 2001 Jan 2002 Feb. 2002 Mar 2002 April 2002 May 2002 June 2002	Mar 2001 April 2001 May 2001 June 2001 July 2001 Aug. 2001 Sept. 2001 Oct. 2001 Nov. 2001 Dec. 2001 Jan 2002 Feb. 2002

3.

Payment of tax Under the self assessment system, companies are required to estimate their own tax payable for a year of assessment and make payment by installments. Companies are also required to furnish to the DGIR a return specifying the chargeable income and the tax payable on that chargeable income and also any other information as required. When a return is furnished, the DGIR is deemed to have made an assessment on the day the return is furnished. If the total amount of the installment payments is less than the actual tax payable, the difference has to be paid not later than the last of the sixth month from the date following the close of the accounting period. When making payments to the IRB please indicate correctly the following items: - Name and address of the company - Tax reference number - Year of assessment - Month for which installment is paid This is necessary to help us match the total installment payments that have been made against the actual liability.

3.1	When will a company pay tax?

A company is required to pay the estimate of tax by the tenth day every month in equal monthly installments, beginning from the second month in the basis period for a year of assessment.

Examle 5: Company ABC Sdn. Bhd. Makes up its accounts from 01/07/2000 to 30/06/2001. The Prescribed form (CP. 204) with estimate for Year of Assessment 2001 must be furnished to IRB before 01/06/2000. Monthly installment will commence from August 2000 and the first installment payment must be made on or before 10/08/2000.

Similarly, for a new company, the payment shall be made by the tent day of every month in equal monthly installment beginning from sixth month of the basis period. asas.

Example 6: Company DEF. Sdn. Bhd. Commences business on 01/04/2000 and makes up its first accounts of 12 months to 31/03/2001. The estimate of tax payable for year 2001 must be furnished to IRB by 30/06/2000. Monthly installment will commence from September 2000 and the first installment payment must be made on or before 10/09/2000.

All payments of tax to the IRB must be made using the Remittance Slips (CP 207). Remittance Slips will be issued by IRB to the companies together with the Notice of Installment Payment (CP 205).

3.2	What if the installment payment is paid late or not paid?

If tax payable of the company exceeds the revised estimate or estimate (if no revised estimate is furnished) by an amount of more than 30% of the tax payable, a 10% increase of tax will be imposed on the difference between that amount and 30% of the tax payable.

3.3	What happens if the tax payable finally exceeds the esteemed or revised estimate?

If tax payable of the company exceeds the revised estimate or estimate (if no revised estimate is furnished) by an amount of more than 30% of the tax payable, a 10% increase of tax will be imposed on the difference between that amount and 30% of the tax payable. .

Example 7:
Company ABC Sdn. Bhd
Tax payable	RM 100,000
Amount of tax estimated	RM 60,000
	RM 40,000
30% of tax payable
(30% @ RM100,000)	RM 30,000
Difference	RM 10,000

Tax Increased (10% x RM10,000) = RM1,000

3.4	Method of payment?

hen making payment to the IRB please indicate the following: a) Name and address of the company. b) Tax reference number. c) Year of assessment. d) The month for which installment for which tax is paid. e) Cheque Number. f) Amount of payment. For payment of the monthly installment of the estimated tax payable, please use the form CP207 (self assessment) issued to the company. This is to help IRB match the payment against the actual tax liability for any given year of assessment. Payment of tax to IRB can made in any of the following ways: a) By post - you can send your cheque/bank draft for payment to the respective addresses mentioned below. All cheques must be crossed and made payable to "THE DIRECTOR GENERAL OF INLAND REVENUE". State the name of the company, the tax reference number and the address on the reverse side of the cheque. Post dated cheques and cheques issued by banks outside Malaysia will not be accepted. Please do not send cash through the post.

Semenanjung Malaysia	Sabah	Sarawak
Lembaga Hasil Dalam Negeri Malaysia Cawangan Pungutan Karung Berkunci 11061 50990 Kuala Lumpur	Lembaga Hasil Dalam Negeri Malaysia Tingkat 1, Blok D, E Bangunan KWSP Jalan Karamunsing 88600 Kota Kinabalu Sabah	Lembaga Hasil Dalam Negeri Malaysia Aras 6- 8, Wisma Ting Pek Khiing No. 1, Jalan Padungan 93100 Kuching Sarawak

b) In person - you can also make payment personally at IRB's payment counters. Currently payment counters are at the following locations:

Semenanjung Malaysia	Sabah	Sarawak
Tingkat Bawah Blok 8A, Kompleks Pejabat Kerajaan Jalan Duta 50600 Kuala Lumpur	Tingkat Bawah Bangunan Wisma Bandaraya Jalan Masjid Lama 88000 Kota Kinabalu Sabah	Aras 3, Wisma Ting Pek Khiing No. 1, Jalan Padungan 93100 Kuching Sarawak

c) To CIMB Bank/MayBank/Public Bank Bhd/RHB Bank - you may pay your tax through the bank's branches throughout Malaysia. The bank's bank-in slip would be your proof of payment and IRB will not issue any Receipt. d) By set off of an overpayment - please request the IRB Collections Branch to make this arrangement if there is an overpayment of tax due to you.

3.5	Payment By Installment.

3.5.1	When should the installment payment commence? When should the installment payment commence? 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. Example 8: The basis period for DEF Sdn. Bhd. for the year of assessment 2001 is 1.1.2001 - 31.12.2001. DEF Sdn. Bhd. has to commence paying the installment of its estimated tax payable in Februari 2001. Example 9: The basis period for GHI Sdn. Bhd. for the year of assessment 2001 is 1.9.2000 - 31.8.2001. GHI Sdn. Bhd. has commence paying the installment of its estimated tax payable in October 2000. For new companies, installment payments must commence in the sixth month of the basis period for the year of assessment i.e. payable in the sixth month after the company commence operations. For this purpose, a company commences operation as soon as it starts to receive income. Example 10: Company NEW is incorporated on 1.2.2001 with the intention of carrying on a restaurant business. There is no commencement of business in the year 2001. However the company commences to receive rental income from the letting of its shop house from March 2001. The company closes its accounts on 31 December each year. The basis period for the year of assessment 2001 is 1.3.2001 - 31.12.2001 The company is required to furnish the estimated tax payable based on profits from the rental income by 31 May 2001. Payment of the first monthly installment has to be made by 10 August 2001
3.5.2	How to determine the amount of each installment? The amount of each installment is determined by dividing the estimated tax payable for the year of assessment by the number of months in the basis period for that year of assessment. Example 11: The basis period for JKL Sdn. Bhd. for the year of assessment 2001 is 1.1.2001 - 31.12.2001 and the estimated tax payable is RM24,000. The monthly installment payment will be: RM24,000/12 = RM2,000 Example 12: Same facts as in Example 10. Assuming the estimated tax payable on the rental income for the year of assessment 2001 is RM10,000. There are 10 months in the basis period. As such the amount of monthly installment is RM1,000 i.e. RM10,000 / 10.
3.5.3	When is the installment payment due? Each installment is payable by the 10th of the calendar month. If the tenth day in the calendar month is a weekly holiday or a public holiday, the working day immediately following the weekly holiday or the public holiday will be considered as the due date.
3.5. 4	What happens if the installment is not paid by the due date? If the full amount of installment is not paid by the due date the tax will be increased by 10 percent on the amount unpaid by the due date. Example 13: The basis period for MNO Sdn. Bhd. for the year of assessment 2002 is 1.1.2002 - 31.12.2002 and the estimated tax payable is RM12,000. As such the monthly installment payment is RM1,000. The first installment is due on 10 February 2002 but payment is made as follows: RM800 paid on 8 February 2002 RM200 paid on 15 February 2002 Tax will be increased on the RM200 as it is not paid by the due date. The amount of increase in tax is RM20 (RM200 x 10%).
3.5. 5	How are the installment payments adjusted after revising the estimated tax In a company revised its estimated tax payable and the amount exceeds the installment payments that have been made during the year, the difference has to be paid in the remaining installments in equal proportions. Example 14: Same facts as in Example 9 but the company submits to the IRB a revised estimate on 25 June 2001. The revised estimated tax payable is RM17,000. The remaining amount is payable as follows: Revised estimated tax: 17,000 Installments for February to June (2,000 x 5) 10,000 Difference 7,000 The revised monthly installments commencing July 2001 will be RM7,000/7 = RM1,000 If the company submits to the IRB the revised estimated tax anytime from 1st to the 10th June 2001 the adjustment will be as follows: Revised estimated tax: 17,000 Installments for February to May (2,000 x 4) 8,000 Difference: 9,000 The revised monthly installments commencing June 2001 will be RM9,000 / 8 = RM1,125.
3.5. 6	What happens if the total installments paid exceeds the revised estimated tax? If the installment payments that have been made during the year, exceeds the revised estimated tax payable, the company may discontinue the balance of installment payments.

3.6	Final Payment Of Tax.

3.6.1

When is the last payment due? If the actual tax payable exceeds the installments payment made for a year of assessment the balance of tax due has to be paid by the due date. The due date is the last day of the sixth month from the date following the close of the accounting period. Example 15: The basis period for company PQR Sdn Bhd for the year of assessment 2001 is 1.01.2001 - 31.12.2001. The balance (after deducting instalment payment) of the tax liability for year of assessment 2001 is due on 30 June 2002 Example 16: A company normally prepares its accounts to 31 July each year.The company decides to change its accounting period to year ending 31 October and accounts are prepared for the period 1.8.2000 - 31.10.2001 (15 months).

Basis Period	Year of Assessment	Due Date for Final Payment of Tax
1.08.2000-31.10.2001	2001	30 April 2002
1.11.2001-31.10.2002	2002	30 April 2003

Contoh 17: A company normally prepares its accounts to 30 September each year. The company decides to change its accounting period to year ending 31 December and accounts are prepared for the period 1.10.2000 to 31.12.2001 (15 months).

Basis Period	Year of Assessment	Due Date for Final Payment of Tax
1.10.2000-31.12.2001	2001	30 June 2002
1.01.2001-31.12.2002	2002	30 June 2003

3.6.2

What happens if the unpaid balance is not paid by the date?. If the tax payable is not paid by the due date, the tax will be increased by 10% without any notice being served. If this amount is still not paid upon expiration of 60 days from the due date (see paragraph 3.6.1) any unpaid balance will be increased by another 5%.

3.7	Payment of tax by companies in other cases

Additional, Advance, Composite and Increase Assessment The DGIR may raise additional assessment, advance, assessment, composite assessment or an increased assessment under certain circumstances. For example a company submits a return showing a tax payable of RM20,000. On review of the return, it is found that a disallowable expense is claimed. The actual tax payable should be RM21,000. As such the DGIR will raise an additional assessment of RM1,000 to recover the additional tax.

3.7.1	When will the tax be due and payable? The tax payable under an assessment will be due and payable on the service of the notice of additional assessment or advance assessment or composite assessment or increased assessment as the case may be. The amount of tax is due and payable even though the company appeals against the assessment
3.7.2	Can tax be paid by installments? The DGIR may allow tax to be paid by installments. The amount and duration of installment payments will be determined on a case-to-case basis upon application by the taxpayer
3.7.3	What happens if such tax is not paid within the specified period? If the tax payable under an assessment is not paid within 30 days after the service of the notice of assessment and arrangement for payment by installment is not made (see paragraph 3.7.2), the tax will be increased by 10% on the unpaid amount without any notice being served. If this amount is still not paid after 60 days from the date of the increase, any unpaid balance will be increased by another 5%
3.7.4	What happens if there is a default in payment of any one installment? In the event of default in payment of any one installment (see paragraph 3.7.2) on the date specified for payment, the arrangement for installment payment is revoked and tax will be increased by 10% on the total unpaid amount. If this amount is still not paid after 60 days from the date of the increase, any unpaid balance will be increased by another 5%.

4.

Submission of Return Form C IRB will still send the return form based on records available. Return forms will be issued quarterly based on the companies' accounting period. Companies should receive the return form at least 3 months before the date of submission of Return Form. The submission of Return Form is due within 6 months after the close of the accounting period. Companies that did not receive any Return Form must contact the nearest tax office.

4.1	Who submits the new Form C?

A new Form C will be designed to facilitate all companies to complete and compute their tax for the year of assessment 2001. This form will be accompanied by explanatory notes on how to fill the form. Please take note that the Return Forms for companies will be issued quarterly as follows:

Table 2: Issue and Submission of Return Form C

5 .	Assessment

5.1	What happens when Return Form C is submitted?

When IRB receives the Return Form C, IRB will check if there are any obvious mistakes, for example, arithmetical error or wrong transcription. If such errors are detected the company will be informed. However, if a Return Form is incomplete, IRB will reject the Return Form and send it back for completion. Upon completion, the company will then furnish the complete return to IRB. IRB may select any case for audit. By this, queries will be raised on entries in the Return Form/Accounts/Computation.

5.2	What is a deemed assessment?

Under the self assessment system, no notice of assessment will be sent to the companies upon their submission of return form c. the DGIR is deemed to have made an assessment based on the tax computation furnished in the return by the company. the return is deemed to be a notice of assessment and the notice of assessment is deemed served on the company on the day on which the DGIR is deemed to have made an assessment. Example 18: Co. ABC Sdn. Bhd accounting year ends on 31/12/2001. the company submits Return Form C for Year of Assessment 2001 on 30/6/2002. The DGIR is deemed to have made an assessment based on the return furnished. The return is deemed to be a notice of assessment and the notice of assessment is deemed served on the company on 30/6/2002.

6 .	Self Assessment Time Table

The new Self Assessment stipulates specific dates for making payments and submitting the return form. Please ensure that the relevant dates followed to avoid penalties. The relevant dates are summarised in the following table: Table 3: Self Assessment Time Table for Companies

Accounting Dates (Year End)	Estimate Furnished to IRB before	Variation of Estimate (if any)	Monthly Installment Commenced	Quarterly Issuance of Return Form	Return Form Submission & Last payment on due date
31/01/2002 28/02/2002 31/03/2002 30/04/2002 31/05/2002 30/06/2002 31/07/2002 31/08/2002 30/09/2002 31/10/2002 30/11/2002 31/12/2002	01/01/2001 01/02/2001 01/03/2001 01/04/2001 01/05/2001 01/06/2001 01/07/2001 01/08/2001 01/09/2001 01/10/2001 01/11/2001 01/12/2001	Julai 2001 Ogos2001 Sept. 2001 Okt. 2001 Nov. 2001 Dis. 2001 Jan 2002 Feb. 2002 Mac 2002 April 2002 Mei 2002 Jun 2002	Mar 2001 April 2001 May 2001 June 2001 July 2001 Aug 2001 Sept. 2001 Oct. 2001 Nov. 2001 Dec. 2001 Jan 2002 Feb. 2002	April 2002 April 2002 April 2002 July 2002 July 2002 July 2002 Oct. 2002 Oct. 2002 Oct. 2002 Jan 2003 Jan 2003 Jan 2003	31/07/2002 31/08/2002 30/09/2002 31/10/2002 30/11/2002 31/12/2002 31/01/2003 28/02/2003 31/03/2003 30/04/2003 31/05/2003 30/06/2003