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IRB’S FAQ ON DEFERMENT OF TAX INSTALMENTS AND REVISION OF TAX ESTIMATE IN THE 3RD MONTH INSTALMENT

By April 25, 2020 July 7th, 2020 No Comments

We are writing to inform that the Inland Revenue Board (IRB) has issued a FAQ in relation to the following measures under the Economic Stimulus Package (ESP) :

  1. Revision of tax estimation (CP 204) in the 3rd month instalments which falls in year 2020
  2. Deferment of tax instalments (CP204) for the month of April to September 2020 (6 months) for companies in Tourism industry
  3. Deferment of tax instalments (CP204) for the month of April to June 2020 (3 months) for SMEs.

We highlight below some salient points for your attention:

1 Revision of tax estimation (CP 204) in the 3rd month instalment which falls in year 2020 a)      In addition to the 6th or 9th month revision, all industries qualify to apply for revision of tax estimation in the 3rd month instalment which falls in year 2020.

b)      The IRB has clarified that the revision is to be made in the month in which the 3rd monthly instalment is due and NOT in the 3rd month of the basis period for that year of assessment.

 

Example:

Year of assessment 2020

Basis period 3rd month instalment Due date for submission of revision Effective date of revision
01/01/2020 – 31/12/2020 Apr 2020 30/04/2020 but extended to 31/05/2020 15/04/2020 (extended)
01/08/2020 – 31/07/2021 Nov 2020 30/11/2020 Note 1

 

Note 1:

If application is submitted before 15 November 2020, the revision shall take effect from the instalment due on 15 November 2020.

If application is submitted after 15 November 2020, the revision shall take effect from the instalment due on 15 December 2020.

c)      Penalties for tax underestimation will be computed based on the latest tax estimate.

d)      Taxpayers which are deferring their tax instalments payments (i.e. Tourism industry or SME) are still entitled to revise the tax estimation in 3rd month instalment.

 
2 Deferment of tax instalments (CP204):

i)        Tourism industry – from the month of April 2020 to September 2020 (6 months)

ii)      SME – April 2020 to June 2020 (3 months)

 a)      Companies in tourism industry with the following Malaysian Standard Industrial Classification (MSIC) codes are eligible for deferment of tax instalments:

·                                          51101  –   Transport of passengers by air over regular routes and on regular schedules

·                                          51102  –   Non-scheduled transport of passenger by air

·                                          51103  –   Renting of air-transport equipment with operator for the purpose of passenger transportation

·                                          55101  –   Hotels and resort hotels

·                                          55102  –   Motels

·                                          55103  –   Apartment hotels

·                                          55104  –   Chalets

·                                          55105  –   Rest house/guest house

·                                          55106  –   Bed and breakfast units

·                                          55107  –   Hostels

·                                          55108  –   Home stay

·                                          55109  –   Other short term accommodation activities n.e.c.

·                                          55200  –   Camping grounds, recreational vehicle parks and trailer parks

·                                          55900  –   Other accommodation

·                                          50111  –   Operation of excursion, cruise or sightseeing boats

·                                          50112  –   Operation of ferries, water taxis

·                                          50113  –   Rental of pleasure boats with crew for sea and coastal water transport

·                                          79110  –   Travel agency activities

·                                          79120  –   Tour operator activities

·                                          79900  –   Other reservation service and related activities

b)      Taxpayers in the tourism industry with other business activities will still be entitled to the 6-month deferment programme.

c)      The deferment programme in respect of the period that qualifies for the deferment can fall into either 1 or 2 years of assessment.

 

Example 1:

SME – Year of assessment 2020

No. of instalment Due date Amount payable as per CP204

(RM)

 Amount paid after deferment

(RM)
1 – 10 15/06/2019 to 15/03/2020 10,000 each month 10,000 each month
11 15/04/2020 10,000 –
12 15/05/2020 10,000 –
Total 120,000 100,000

SME – Year of assessment 2021

No. of instalment Due date Amount payable as per CP204

(RM)

 Amount paid after deferment

(RM)
1 15/06/2020 10,000 –
2 – 12 15/07/2020 to 15/05/2021 10,000 each month 10,000 each month
Total 120,000 110,000

 

Example 2:

Tourism industry – Year of assessment 2020

No. of instalment Due date Amount payable as per CP204

(RM)

 Amount paid after deferment

(RM)
1 – 109 15/06/2019 to 15/03/2020 10,000 each month 10,000 each month
11 15/04/2020 10,000 –
12 15/05/2020 10,000 –
Total 120,000 100,000

Tourism industry – Year of assessment 2021

No. of instalment Due date Amount payable as per CP204

(RM)

 Amount paid after deferment

(RM)
1 15/06/2020 10,000 –
2 15/07/2020 10,000 –
3 15/08/2020 10,000 –
4 15/09/2020 10,000 –
5 – 12 15/10/2020 to 15/05/2021 10,000 each month 10,000 each month
Total 120,000 60,000
  1. Penalties for tax underestimation will NOT be computed based on the total instalment paid BUT based on the latest tax estimate.