Malaysia · Tax & accounting
Corporate tax services in Malaysia
Corporate tax in Malaysia runs on two filings, the CP204 estimate paid in monthly instalments and the annual Form C, on top of a 24 percent rate that foreign-owned companies pay in full. Our Kuala Lumpur team handles the estimate, the return, and the planning that keeps your bill and your penalties down.
Overview
How corporate tax works in Malaysia
Corporate income tax in Malaysia is charged on a company’s chargeable income at a standard rate of 24 percent, administered by LHDN, the Inland Revenue Board. A company is taxed where its management and control sit in Malaysia, and the compliance turns on two filings: an estimate of tax paid in advance, and an annual return that settles the real figure.
The estimate is the CP204, filed before the year begins and paid in monthly instalments. After the year closes, the company files Form C, its annual return and tax computation, through the MyTax portal, and pays or reclaims the difference against what it already paid. Both have firm deadlines and mechanical penalties, which is where most of the cost of getting it wrong comes from.
Rates
Corporate tax rates
A flat 24 percent, with reduced rates that foreign-owned companies do not get.
| Chargeable income | Resident SME (locally owned) | Standard / foreign-owned |
|---|---|---|
| First RM150,000 | 15% | 24% |
| RM150,001 to RM600,000 | 17% | 24% |
| Above RM600,000 | 24% | 24% |
Foreign-owned companies pay the full 24 percent. The 15 and 17 percent rates are for locally-owned SMEs only. Since the 2024 year of assessment, once more than 20 percent of a company’s paid-up capital is held, directly or indirectly, by a foreign company or non-Malaysian individuals, the reduced rates fall away and the flat 24 percent applies to all chargeable income. For most foreign investors, 24 percent is the planning number from day one.
The SME rates otherwise require a resident company with paid-up capital of RM2.5 million or less and gross income of RM50 million or less. Petroleum income is taxed separately at 38 percent.
Filing
The filings: CP204 and Form C
Malaysia collects corporate tax in advance and reconciles it at the year-end. You estimate the tax up front on the CP204, pay it monthly, and settle the difference when the actual figure is known on Form C.
| Filing | What it is | When |
|---|---|---|
| CP204 | Estimate of tax payable for the year | 30 days before the basis period begins (new companies, within 3 months of starting) |
| Instalments | Monthly payment of the estimated tax | By the 15th of each month |
| CP204A | Revision of the estimate up or down | 6th, 9th, and 11th month of the basis period |
| Form C / e-C | Annual corporate tax return and computation | Within 7 months of the financial year-end, via MyTax |
New SMEs are exempt from filing the CP204 estimate for their first two years of assessment, though a nil estimate is still the safe move. Filing Form C online usually carries about a month’s grace, but the tax itself is still due on the seven-month deadline.
The penalties are mechanical. Underestimate the CP204 by more than 30 percent and a 10 percent penalty applies to the shortfall beyond that line. Pay the Form C balance late and a 10 percent penalty is added automatically. Both are avoidable with a realistic estimate and a tracked deadline, which is most of what this work is.
What goes wrong
Common corporate tax filing mistakes
The penalties in Malaysia are predictable, which means most of them are avoidable. These are the ones we see catch companies out.
Assuming the SME rate applies. Foreign-owned companies often budget for 15 to 17 percent, then owe the full 24 percent because more than 20 percent of their shares are foreign-held. The rate should be set at incorporation, not discovered at filing.
Underestimating the CP204. If the final tax comes in more than 30 percent above the estimate, the 10 percent penalty bites. Revising the estimate in the 6th, 9th, or 11th month, once the year’s shape is clear, is what avoids it.
Missing the CP204 deadline. The estimate is due 30 days before the basis period starts, not with the return. It is easy to overlook in a company’s first full year, and a missed estimate draws its own penalty.
Filing or paying Form C late. The return and the payment are due seven months after the year-end. Late payment adds an automatic 10 percent to the balance, on top of any late-filing penalty.
Leaving the books to the last minute. Reconstructing a year of transactions at filing time is where deductions get missed and errors creep in. Clean monthly bookkeeping is what makes the return quick and defensible.
Planning
Tax planning for companies in Malaysia
For a foreign-owned company paying the flat 24 percent, the planning is about the base, not the rate. Capital allowances on equipment and assets, allowable deductions claimed in full, and the right treatment of expenses all lower chargeable income before the rate is applied.
Beyond that, Malaysia runs a deep set of incentives, including Pioneer Status, the Investment Tax Allowance, and Malaysia Digital status, that can cut or defer tax for qualifying activities. Its network of more than 70 double-tax treaties also reduces the withholding tax on dividends, interest, and royalties paid to non-residents. The value is in deciding which of these fit before the year closes, rather than filing and hoping.
The difference between a good and an expensive year is usually decided long before the return. Talk to our team about your structure while there is still time to plan around it.
How we help
Your corporate tax, handled by Emerhub
Company taxation handled end to end: the estimate, the return, the planning, and the books behind it.
CP204 and instalments
We prepare your estimate, file the CP204, manage the monthly instalments, and revise before the 30 percent line.
Form C filing
The annual return and tax computation filed through MyTax within the seven months, with the balance settled on time.
Tax planning
Capital allowances, incentives, and treaty relief applied before the year closes, so 24 percent is the ceiling rather than the surprise.
Records and e-invoicing
Clean books behind the return, and the move to LHDN e-invoicing set up and kept current as it rolls out.
Common questions
Corporate tax questions
What company owners in Malaysia ask most.
What is the corporate tax rate in Malaysia?
The standard rate is 24 percent of chargeable income. Resident, locally-owned SMEs pay a reduced 15 percent on the first RM150,000 and 17 percent up to RM600,000, with 24 percent above that.
Do foreign-owned companies get the SME rate?
No. Since the 2024 year of assessment, if more than 20 percent of a company’s paid-up capital is owned, directly or indirectly, by a foreign company or non-Malaysian individuals, the reduced rates do not apply. The flat 24 percent applies to all of its chargeable income.
When is Form C due?
Within 7 months of the financial year-end, filed through the MyTax portal. For a 31 December year-end, that is the end of July. Online filing usually adds about a month’s grace, but the tax is still due on the seven-month date.
What is CP204?
CP204 is the estimate of the tax a company expects to pay for the year, filed 30 days before the basis period begins and paid in monthly instalments. The estimate can be revised on Form CP204A in the 6th, 9th, and 11th months.
What happens if I underestimate the tax?
If the actual tax for the year is more than 30 percent above the estimate you filed, a 10 percent penalty is charged on the portion of the shortfall beyond that 30 percent. Revising the estimate during the year is what keeps you under it.
Are new companies exempt from CP204?
An SME is exempt from furnishing the CP204 estimate for its first two years of assessment, and a company whose first basis period is under six months need not file one. A nil estimate is still the safe practice.
Do audited accounts go with the return?
Form C is filed with a tax computation and financial statements. Whether those statements must be audited depends on whether the company qualifies for audit exemption under the current thresholds for small private companies.
Can a tax treaty reduce my withholding tax?
Yes. Malaysia has more than 70 double-tax treaties, which can lower the withholding tax on dividends, interest, and royalties paid to non-residents below the standard domestic rates, where the treaty conditions are met.
On the ground in Malaysia
Talk to our Kuala Lumpur team
Tell us your financial year-end and your ownership structure. Our Kuala Lumpur team will handle the CP204 estimate, the monthly instalments, and the Form C, and plan around the 24 percent rate before the year closes.
Emailmalaysia@emerhub.com
Phone / WhatsApp+60 17 684 9718
OfficeC-18-6, KL Trillion
Kampung Datuk Keramat
50400 Kuala Lumpur, Malaysia
Kampung Datuk Keramat
50400 Kuala Lumpur, Malaysia