Does a new company need to submit CP204 in its first years?
The first CP204 is due within three months of the day the company starts operating, if the first basis period is at least six months. The 85% floor starts from the second year. A new Malaysian company with paid-up ordinary capital of RM2.5 million or less needs no estimate for its first two years, unless related-company or foreign-ownership limits are breached.
New companies have special CP204 rules in s.107C(4), (4A) and (4B).
First estimate. If the first basis period is at least six months, the estimate is due within three months from the date operations begin. LHDN's example: a company that began operating on 3 April 2021 had to submit by 30 June 2021. For a shorter first period, confirm the position with LHDN.
Instalments. A new company pays in equal monthly instalments from the sixth month of the basis period, due on the 15th of each month. The 85% minimum and the "30 days before the basis period" deadline apply only from the second year of assessment.
Exemption for small new companies (s.107C(4A)). A company resident and incorporated in Malaysia that first commences operation does not have to furnish an estimate or pay instalments for its first year of assessment and the next one, provided its paid-up ordinary share capital is RM2.5 million or less at the beginning of the basis period. Its tax is then paid by the Form C due date.
The exemption is lost (s.107C(4B)) if more than:
- 50% of its ordinary capital is owned by a related company (one with paid-up ordinary capital above RM2.5 million), or the reverse, or both are more than 50% owned by another company; or
- 20% of its ordinary capital is owned by foreign companies or non-citizen individuals.
From the third year, normal CP204 rules apply.
Legal basis
- Income Tax Act 1967, s.107C(4), (4A) and (4B)
- Income Tax Act 1967, s.107C(6)
Sources
Applies to YA 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- What do I need to set up before I can issue e-invoices?You need a company tax identification number (TIN), MyTax access, and a way to submit invoices to LHDN's MyInvois system: the MyInvois portal or accounting software linked through the API. You also need customers' TINs for e-invoices.
- What is the corporate tax rate for a small company in Malaysia?A Malaysian resident company normally pays 24% income tax. A company that meets the SME conditions pays 15% on the first RM150,000 of chargeable income, 17% on the next RM450,000 (up to RM600,000), and 24% on anything above that.
- What conditions must my company meet to get the SME tax rates in Malaysia?To use the lower 15%/17% rates, the company must be resident, have ordinary paid-up capital of RM2.5 million or less, and gross business income of RM50 million or less. It must also pass the related-company test and, from YA 2024, a foreign-ownership test.
- Does a dormant company with no income still have to file a tax return in Malaysia?Yes. LHDN says companies that are dormant or have not started business must still register a tax file and file returns. A nil return tells LHDN there is no taxable income, and failing to file can be an offence even when no tax is due.
- What is the Year of Assessment and how does it relate to my financial year?The Year of Assessment (YA) is the calendar year in which your company's accounting year (the basis period) ends. A company with a financial year ending 30 June 2025 reports that income in YA 2025.