CP204 Update: Changes to Installment Payment Structure – What Businesses Need to Know

Introduction: CP204 Update.

In Malaysia, an annual tax estimate to be submitted through a form called CP204 by companies, LLPs, trusts, as well as cooperatives to the Inland Revenue Board ( Lembaga Hasil Dalam Negeri Malaysia or LHDN ) so as to pay the estimated corporate tax in monthly instalments. 

In the recent past, a CP204 update has brought some drastic changes to the installment payment model that will more effectively align the tax payment with a financial year and simplify the compliance requirements of businesses. This article breaks down what is new, its impact on your tax planning and tips that you can use in being compliant.

What Is Form CP204 and Why It Matters.

Form CP204 is the form that is under Section 107C of the Malaysian Income Tax Act 1967 to calculate how much a company or any other similar entity is going to pay as tax in a year of assessment (YA). 

The amount of the estimated tax should be paid in monthly installments once the same has been submitted. Historically these payments run over two tax years, which created accounting and cash-flow difficulties.

Past Installment Structure - Preface to the Update.

In the conventional CP204 organization:

• The existing companies began to pay monthly installments from the second month of the basic period (eg: usually February to a December year end). 
• The installment cycle might also bleed over into the following evaluation year making it hard to reconcile and report. 

Major changes align with the Budget 2026 presentation.

The most prominent modifications of the CP204 installment structure are:

Installments Completely Conform to the same tax year.

According to the new regulations which come into operation in YA 2028:

• CP204 installments have to be accomplished in the same year of assessment. 
• The original installment begins in Month 1 (rather than Month 2). Eg: start in January for a December year end.
• This transformation means interim payments will be made on a single tax payment basis every YA, and the cross-year accounting discrepancies would be minimal. 

Transitional Arrangement for YA 2027.

To ease the transition:

Installments of YA 2027 will continue to be received in the second month, although there will be only 11 payments to be made to cover the year. 

The benefits of the Updated Structure to the businesses.

The new CP204 upgraded installment plan has a number of advantages in a practical sense:

Greater conformity to financial reporting.

• There will be no overlapping of payments in two tax years and this will be easier to reconcile. 

Made simple forecasting and budgeting.

• Regular cash-flows make the monetary planning less problematic.

Improved compliance

• This is easier when payments are included in one assessment year and the installments can be paired with the estimated taxes.

CP204 Payment Methods

Also in addition to installment changes, LHDN has redirected CP204 payments to electronic systems like e-TT (electronic treasury transfer). 

To pay:

1. Use the LHDN portal (https://byrhasil.hasil.gov.my) to log in to e-TT.
2. Select “Payment using Bill Number” or “Payment Using Tax Identification Number (TIN)”.
3. Choose the correct year of assessment when making payment.
4. Create a virtual account bill to transfer the payment.
5. Confirmation Save To your records. 

This is a new approach that assists in enhancing traceability and minimizes the inaccuracies of manual-based processing.

Deadlines and Compliance Requirements.

Companies must:

• Submit Form CP204 at least 30 days prior to the commencement of the basis period. 
• Pay monthly instalment on or before the 15 th of every month (dedicated deadline under CP204). 
• Review and submit revised estimates in Form CP204A in 6 th, 9 th or 11 th month of the basis period as required. 

What Will Happen If You Do Not Comply

Failure to file CP204, or make an installment payments on time can trigger:

• Fine of RM200 to RM2,000 or possible prosecution. 
• Penalty 10% of unpaid monthly installment balances. 
• Penalties on underestimation in case of actual tax payable is more than estimated by over 30%.

FAQ