Other BriefingsHow Should Foreign Companies File Corporate Income Tax Returns in Malaysia?
Foreign-owned companies operating in Malaysia generally need to file an annual corporate income tax (CIT) return with the Inland Revenue Board of Malaysia (HASiL). For companies, the return is filed electronically using Form e-C and is generally due within seven months after the end of the company’s accounting period.
Who must file a corporate income tax return in Malaysia?
A Malaysian-incorporated company is subject to Malaysian corporate tax filing requirements regardless of whether its shareholders are Malaysian or foreign. A foreign investor operating through a Malaysian subsidiary must therefore ensure that the company files its own annual CIT return.
Foreign-incorporated companies registered to operate in Malaysia may also have Malaysian corporate tax filing obligations. Their tax position will depend on their activities in Malaysia and the income subject to Malaysian tax.
The filing obligation can continue even where the company has no taxable profit. Companies must submit a return even when their accounts show a loss. Dormant companies are also generally required to submit Form e-C each year, although they are not required to submit the CP204 estimate of tax payable while dormant.
When must companies file their CIT returns?
A company generally has seven months from the end of its accounting period to submit Form e-C. Any balance of tax payable is also due by the last day for submitting the return.
For instance, a company with an accounting period ending on December 31 would generally have until July 31 of the following year to submit its return. A company with a different financial year-end calculates its filing deadline from the end of that accounting period.
The CIT return should not be confused with Malaysia’s estimated tax regime. Existing companies generally submit an estimate of tax payable through e-CP204 no later than 30 days before the beginning of the basis period and subsequently make instalment payments. A newly operating company whose first basis period is at least six months generally submits its initial estimate within three months after commencing operations.
How do companies prepare and file their CIT returns?
Preparing the CIT return begins with the company’s financial accounts, but accounting profit is not necessarily the amount on which Malaysian corporate income tax is calculated.
Calculate taxable income
The company generally starts with its accounting results and makes the adjustments required under Malaysian tax rules. Expenses recorded in the accounts may need to be added back where they are not deductible, while qualifying deductions, available tax losses, exemptions, and incentives can affect taxable income.
Accounting depreciation is generally not deductible for Malaysian income tax purposes. Instead, qualifying expenditure on certain assets may generate capital allowances that can be claimed in calculating taxable income.
Cross-border and related-party transactions also need to be reflected correctly in the tax computation. Management fees, royalties, interest, services, and other transactions with overseas group companies may affect taxable income and create withholding tax or transfer pricing considerations.
Reconcile tax already paid
The company must compare its final tax liability with the instalments already paid based on its CP204 estimate.
If the final liability exceeds the amount already paid, the outstanding balance generally needs to be settled by the deadline for filing Form e-C.
Complete and submit Form e-C
Companies submit their annual income tax return electronically using Form e-C through Malaysia’s MyTax system.
The information filed should correspond with the company’s financial statements and supporting tax computation. A company can appoint a tax agent to prepare and file Form e-C on its behalf.
What supporting documents and records are required?
Companies should maintain financial statements, tax computations, accounting records, invoices, receipts, and other documentation supporting the income, expenditure, deductions, and allowances reported in the return. Relevant records and books of account generally need to be retained for seven years.
Where Malaysia’s transfer pricing documentation requirements apply, foreign-owned companies may also need documentation supporting their transactions with related parties.
Malaysia also requires specified tax information and documents to be submitted electronically through the Malaysian Income Tax Reporting System (MITRS) under Section 82B of the Income Tax Act. This requirement applies to companies beginning from the year of assessment 2025. The submission is made after the relevant tax return has been filed and is due within 30 days after the deadline for submitting the return.
MITRS is separate from Form e-C. Specified documents must be uploaded electronically through the MyTax portal and provided in either Malay or English; documents in another language need to be translated.
What happens if a company files its CIT return late or makes an error?
Missing the CIT filing deadline can expose a company to penalties and further action by HASiL. A company can also face consequences where its return understates taxable income or the amount of tax payable.
Companies that discover an error after filing should correct it through the applicable HASiL procedure rather than carrying the error into the following year. Depending on the type and timing of the error, this may involve an amended return or a written application to HASiL.
Contact Dezan Shira & Associates for Malaysia Tax Compliance
Dezan Shira & Associates can assist foreign-invested companies with their Malaysian corporate tax compliance and annual CIT filings. Contact Dezan Shira & Associates for support with preparing and filing your company’s tax return and managing its tax obligations in Malaysia.
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