Covid-19: Tax Updates *Updated*

Following the further extension of the Movement of Control Order (“MCO”), the Inland Revenue Board of Malaysia (“IRB”) issued its revised FAQ recently. We set out here updates on our earlier e-alert issued on 3 April 2020 and 6 April 2020.
 
Tax Estimation Payments (CP 204)
 
In the recently revised FAQ, the IRB allows Corporate Taxpayers[1] to defer the CP 204 payment for April 2020 (which is due on 15 April 2020) and May 2020 (which is due on 15 May 2020) to 31 May 2020.  The June CP 204 remains payable by 15 June 2020.
 
Commentary
 
As highlighted in our earlier e-alert, Corporate Taxpayers may not have sufficient liquidity in the near term to meet back to back CP204 instalments.
 
Whilst the revised FAQ maintains the position that no late payment penalty under Section 107C(9) of the Income Tax Act 1967 (“ITA”) will be imposed on the deferred CP204, there continues to be no mention of a waiver of the penalty under Section 107C(10) of the ITA in the revised FAQ.
 
Clarification on the criteria of a SME
 
The IRB in its revised FAQ has further clarified that the criteria by which to be considered an SME are a company with (i) a paid-up capital of not more than RM2.5 million, and (ii) a gross business income of not more than RM50 million only.
 
Stamp Duty
 
In this revised FAQ, the IRB expressly assures that no late payment penalty will be imposed for all instruments which are due to be stamped between 18 March 2020 to 30 May 2020 as an extension of time has been given until 31 May 2020.
 
Similarly, no late payment penalty will be imposed if payment of a notice of assessment on stamp duty which falls within the MCO period has not been made as an extension of time has been given until 31 May 2020.
 
Commentary
 
However this revised FAQ is in contradiction with the IRB’s letter dated 11 April 2020 issued to the Malaysian Bar Council.
 
In paragraph 4 of the IRB’s letter, the deadline for stamping instruments and payment of notice of assessment without penalty is stated to be 30 April 2020.
 
Further clarification from the IRB on the effective deadline is therefore immediately necessary.
 
Extensions of Tax Deadlines
 
As set out in the revised FAQ, the IRB granted extensions of time until 31 May 2020 for the following:
 
  1. the submission of documents for tax audit/investigation or provision of feedback to IRB’s letters which are due within the period of 18 March 2020 until 15 May 2020;
  1. the submission of Notice of Appeal (Form Q) to the Special Commissioners of Income Tax but the taxpayers are still required to file an application for an extension of time to file the appeal (Form N);
  1. the submission of Country-by-Country Reporting (“CbCR”) report due to be submitted on 30 April 2020 and CbCR notification due to be submitted on 31 March 2020 and 30 April 2020;
  1. the submission of tax return forms and payments for Labuan entities;
  1. the submission of RPGT return forms and payment thereof which are due within the period of 18 March 2020 until 31 May 2020;
  1. the submission of irrevocable election form to be taxed under the ITA (Form LE3) which falls due during the MCO period for Labuan entities;
  1. the submission of Statement of Monetary and Non-Monetary Incentive Payment to An Agent, Dealer or Distributor (Form CP58) which is due during the MCO;
  1. the submission of all types of tax estimate submissions which fall due during the MCO period, tax estimate payments which fall due on 15 April 2020 and 15 May 2020 and the revised tax estimate in the third month instalment that falls due in April 2020;
  1. the submission of Monthly Tax Deduction (MTD) data and MTD/CP 38 payment for March and April 2020 remuneration.
Commentary
 
Taxpayers should monitor closely the submission deadlines of their statutory forms or necessary documents and/or payments in order to avoid any late submission or payment post-MCO.
 
If you have any queries, please contact Preetha Pillai (psp@skrine.com) or Desmond Liew (desmond.liew@skrine.com).
 
 

[1] Companies, Limited Liability Partnerships, Co-operative Societies, Trust Bodies, Unit Trusts/ Property Trusts, Real Estate Investment Trusts/ Property Trust Funds, Business Trusts and Petroleum (Upstream & Downstream) Companies.