CP204 Tax Estimate: Deadlines, Instalments, CP204A Revisions and Penalties

What is a CP204 tax estimate?

A CP204 tax estimate is a company's estimate of the tax it expects to pay for the coming year of assessment, submitted to LHDN so the tax can be paid in monthly instalments during the year rather than in one lump sum afterwards. It is an estimate, not the final tax return: the final figure comes after the year ends, when your tax agent completes the tax computation and Form C.

Once Form C is done, the instalments you paid are set against the actual tax. If you paid too little, the balance is payable; if you paid too much, the excess is refundable.

For an owner, CP204 matters in two ways:

• Cash flow. An instalment leaves your bank account every month, by the 15th, whether or not your customers have paid you.
• Penalties. Paying late, or estimating far too low, costs money even when the final tax is paid in full.

The rules below are as of October 2026 and apply to companies. Your licensed tax agent normally prepares and submits the estimate and any revisions; your part is to give them reliable numbers from your books.

When must a company submit CP204?

An existing company must submit CP204 at least 30 days before the start of its basis period, which for a company is its financial year. A newly started company has 3 months from the date it commences operations.

Situation	What the rule says
Existing company	Submit at least 30 days before the basis period (financial year) starts
New company	Submit within 3 months from the date it commences operations
New SME with paid-up capital of RM2.5 million or less	Exempt from furnishing estimates and paying instalments for its first 2 years of assessment from commencement
Monthly instalments	Due by the 15th of each month
Revisions (CP204A)	In the 6th, 9th and 11th months of the basis period

Example: for a company whose financial year runs from 1 January to 31 December 2027, the CP204 must reach LHDN at least 30 days before 1 January 2027, so aim to have it submitted by 1 December 2026.

The new-SME exemption is breathing space, not a tax holiday. Tax for those first two years is still payable, so set money aside from the start, and ask your tax agent when your first CP204 will be due once the exemption ends.

How do you work out the CP204 estimate from your management accounts?

Start from up-to-date management accounts, adjust for what you already know about next year, then apply the tax rates. An estimate copied from last year's Form C, with no look at this year's numbers, is how estimates go badly wrong.

Worked example: a Penang hardware trader preparing its 2027 estimate

The company has a 31 December FYE and qualifies for the SME rates. In early November 2026, the owner and the tax agent prepare the CP204 for 2027 using management accounts closed up to October.

Step	RM
Profit for January–October 2026 per management accounts	350,000
Add expected November–December profit at the same pace	70,000
Estimated 2026 profit	420,000
Less a one-off bulk order in 2026 that will not repeat	(20,000)
Add profit from a new supply contract starting in 2027	40,000
Forecast 2027 profit	440,000
Net tax adjustments by your tax agent (e.g. non-deductible entertainment added back, capital allowances deducted)	10,000
Estimated 2027 chargeable income	450,000
Tax on the first RM150,000 at 15%	22,500
Tax on the next RM300,000 at 17%	51,000
CP204 estimate for 2027	73,500

Spread over 12 monthly instalments, RM73,500 works out at RM6,125 a month, due by the 15th.

What to give your tax agent before the estimate

• Year-to-date profit and loss account and balance sheet, closed and reconciled.
• Last year's tax computation and CP204 figures, including any revisions.
• A simple sales and margin forecast for the coming year.
• Planned large purchases of equipment, vehicles or premises.
• New loans and their interest.
• One-off or unusual income and expenses, listed separately.
• Any change in the business, such as a new branch or a lost major customer.

This is why up-to-date books matter. If your bookkeeping is six months behind, the year-to-date profit line is a guess, and so is every figure below it.

What is the 85% rule for CP204?

Your CP204 estimate cannot be lower than 85% of the previous year's estimate or revised estimate. The rule stops companies from cutting their instalments sharply without a reason.

In the example above, last year's revised estimate was RM70,000, so this year's estimate must be at least RM59,500 (85% × RM70,000). The planned RM73,500 clears that floor comfortably.

What if you genuinely expect a weaker year, say because a major customer has left? The starting estimate still has to respect the 85% floor. Once the drop shows up in your management accounts, you bring the estimate down through a CP204A revision in the 6th, 9th or 11th month. Discuss any large drop with your tax agent before you submit.

When can you revise CP204 with CP204A?

You can revise the estimate with CP204A in the 6th, 9th and 11th months of the basis period. Use those windows when your management accounts show profit running clearly above or below what the estimate assumed.

1. Month 5: first review. Close the first five months, compare year-to-date profit with the estimate and update the full-year forecast.
2. Month 6: first revision window. If the forecast is clearly off, ask your tax agent to submit CP204A.
3. Month 8: second review with eight months of figures, ahead of the month 9 window.
4. Month 11: last revision window. By now the year's result should be fairly clear, so this is the final chance to align the estimate before the year closes.

Continuing the example: by the end of May 2027 the new contract is performing far better than expected, and the five-month accounts point to chargeable income of about RM600,000 for the year. Tax at SME rates on RM600,000 is RM22,500 + RM76,500 = RM99,000, so the company revises its estimate to RM99,000 in month 6. Your tax agent will confirm how the remaining instalments change after the revision.

What are the CP204 penalties?

There are two main CP204 penalties: one for paying late and one for estimating too low.

• Late instalment: an instalment not paid by the 15th is increased by 10%. On a RM6,125 instalment, that is RM612.50.
• Underestimate: if the tax finally payable exceeds your estimate (or last revised estimate) by more than 30%, LHDN imposes a 10% penalty on the excess above that 30% band, under section 107C(10) of the Income Tax Act 1967.

Here is what the month 6 revision changes. Suppose the final tax per Form C turns out to be RM111,000, on chargeable income of RM650,000.

Item	Without revision	With CP204A revision in month 6
Estimate	RM73,500	RM99,000
Final tax per Form C	RM111,000	RM111,000
Shortfall	RM37,500	RM12,000
Gap more than 30%?	Yes	No
Underestimate penalty	10% of the excess above the 30% band	None

In both cases the shortfall is still paid as the balance of tax after Form C, and paying that balance late adds 10% under section 103. The revision did not reduce the tax; it avoided a penalty and spread the cash more evenly through the year. Your tax agent will compute any penalty precisely.

To see how chargeable income turns into tax, read our SME tax rate guide; for the year-end return itself, see the Form C deadline guide.

How should you plan cash for CP204 instalments?

Treat the instalment as a fixed monthly bill, like rent, and set the cash aside before you spend on anything optional.

• Know your heavy day. The CP204 instalment is due by the 15th, the same date as EPF, SOCSO, EIS and PCB for the previous month's payroll. Plan for all of them together; see our payroll contributions guide.
• Ring-fence the money. Move the instalment into a separate tax account as customer payments come in, so it is there on the 15th.
• Watch receivables. Tax follows profit, not cash collected. If customers pay slowly, you can owe instalments on sales you have not been paid for yet. Our article on being profitable but short of cash explains the gap.
• Plan the year-end balance. Any shortfall becomes payable after Form C, on top of the next year's instalments.
• Exempt new SMEs: save anyway. No instalments does not mean no tax. Set aside a monthly amount based on your projected tax.

Resist the temptation to underestimate to keep cash today. The tax still has to be paid, the balance arrives later as a lump sum, and a gap of more than 30% brings a penalty on top.

How WeCount helps

WeCount is not a tax agent. We keep your books current every month and provide management reports showing year-to-date profit, so you and your licensed tax agent have reliable figures for the CP204 estimate and for each CP204A window in months 6, 9 and 11. Instalments you pay are recorded and matched to your bank statements as part of the monthly reconciliation. Regulated tax-agent and professional accountancy services are delivered through appropriately authorised partners where required. Contact us to get your books ready.