The Malaysian Inland Revenue Board (“MIRB”) has further updated the Frequently Asked Questions (“FAQs”) on 3 April 2020 in relation to taxation matters during the Movement Control Order period from 18 March 2020 to 14 April 2020.
Some of the notable updates include the following:
- Tax Instalment Payments (CP204) Which are Due on 15 April 2020
Extension of time to 30 April 2020 is given for tax instalment payments which are due on 15 April 2020. This is in line with the clarification provided by the MIRB earlier.
- Deferment of Monthly Tax Instalment Payments (CP204)
- 3 Months from April 2020 for Small and Medium Enterprises (“SMEs”)
- 6 Months from April 2020 for Companies in the Tourism Industry
(a) Deferment will be given automatically based on the MIRB’s records;
(b) There is no requirement to pay the deferred tax instalment payments and tax penalties will not be imposed. The balance of tax (if any) has to be settled upon the submission of the income tax return; and
(c) In the FAQs, qualifying SMEs are companies which have a paid-up capital in respect of ordinary shares of RM2.5 million and less at the beginning of the basis period for a Year of Assessment and having gross business income of not more than RM50 million.
The definition of SMEs for the above purposes seems to follow that of the preferential tax rate regime for SMEs as provided in the Income Tax Act 1967. If this is the case, it should apply to a resident company incorporated in Malaysia only and a company will not qualify for the SME status if more than 50% of the paid up capital of the company is directly or indirectly owned by a related company which has a paid up capital exceeding RM2.5 million, or vice versa, or more than 50% of the paid up capital of both companies are directly or indirectly owned by another company. However, this proviso is not stated in the FAQs. Further confirmation on the application of this proviso may to need to be sought from the MIRB.
- Deferment of Monthly Tax Instalment Payments (CP500)
(a) CP500 payment for March 2020 and May 2020 tax instalments can be deferred; and
(b) There is no requirement to pay the deferred tax instalment payments and tax penalties will not be imposed. The balance of tax (if any) has to be settled upon the submission of the income tax return.
Based on the FAQs, the automatic approval for the tax deferment will be given to taxpayers in the SME category. However, there is no further clarification on the person (other than a company) who will qualify to be in the SME category.
We are pleased to attach the updated summary of the key points in the FAQs for your attention. The updated items are highlighted in “Yellow”.
The MIRB’s updated FAQs and our updated summary can also be accessed via the above links.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.