The Tax-Related Implications of the Movement Control Order

Key Takeaway

The Movement Control Order (MCO) was recently implemented by the Malaysian Government, which at the point of writing of this alert, covers the period from 18 March 2020 to 31 March 2020. This in turn affected several administrative matters with the temporary closure of the office of the Inland Revenue Board (IRB) nationwide during this period.

To address the taxpayers concerns, the IRB on 19 March 2020, published ‘FREQUENTLY ASKED QUESTIONS ON TAX MATTERS DURING THE MOVEMENT CONTROL ORDER PERIOD’ on procedural, filing and payment matters. The following are some of the important clarifications made in the FAQ:

Question

Remarks by the IRB

GENERAL

(a)

Extension of time to submit documents for audit or investigation within the period of 18 March 2020 until 29 April 2020.

Extension of time will be given until 30 April 2020.

(b)

Extension of time to provide feedback to IRB letters within this period.

Extension of time will be given until 30 April 2020.

FORMS

(a)

Extension of time for the submission of return forms either manually or e- Filing.

The last day to file the various income tax return forms has been extended by up to two months from the original deadline.

Please note that the special extension of two months does not apply to companies with financial year ended on 31 December 2019.

(b)

Extension of time for the submission of Form CP58.

Extension of time will be given until 30 April 2020.

(c)

Submission of Country-by-Country Reporting (CbCR).

(i) Entities in Malaysia responsible for the filing of the CbCR report on 31 March 2020 will be given an extension of time until 30 April 2020.

(ii) Notification for the purpose of CbCR by constituent entity which needs to be submitted by 31 March 2020 can be submitted on or by 30 April 2020.

(d)

Extension of time to Labuan entities for the submission of irrevocable election form to be taxed under the Income Tax Act 1967 (Form LE3) where the due date is during this period.

Example of scenario:

Accounting period / basis period for a Labuan entity is 01/01/2020 – 31/12/2020. The due date for submission of Form LE3 for Year of Assessment 2020 is on 31/03/2020.

Extension of time will be given until 30 April 2020 for the submission of Form LE3 for Year of Assessment 2020.

PAYMENT

(a)

Extension of time to submit CP204 tax estimates.

The deadline for submission of the CP204 which falls between 18 to 31 March 2020 will be extended to April 30 2020.

The submission of amendments to the estimated tax payable (CP204A) for the 6th and 9th month which is due by March 31 2020 will be extended to April 30, 2020.

(b)

Extension of time for the first payment of CP500 tax estimates.

The first instalment which should be paid by 31 March 2020 is extended to 30 April 2020.

(c)

Deferment and revision of tax estimate payment (CP204) in the 3rd month (for March 2020 cases) instalment in 2020 under the Economic Stimulus Package.

Submission of tax estimate revision (CP204A) in the 3rd month and the instalment payment is extended to 30 April 2020.

(d)

Can payment of tax estimate for companies be deferred?

Companies have an option to defer (if the activity of the company is related to tourism) or revise tax estimates in the 3rd month if the 3rd month instalment falls in March 2020.

(e)

Will I be imposed with a tax increase if there is a delay in making payment during this period?

Extension of time for tax payments will be given until 30 April 2020. Therefore payments received during this period will not be subjected to tax increase.

(f)

Submission of forms and payment of tax for Labuan entities during this period.

Extension of time of up to 30 April 2020 will be given to submit forms and make tax payments.

(g)

How to make withholding tax payment during this period?

Payment of withholding tax which falls between 18 to 31 March 2020 can be made beginning 01 April 2020 up to 30 April 2020.

Payment can also be made through telegraphic transfer (TT) by furnishing complete payment details to IRBM through fax at 03-6201 9637 or through e-mail at: HelpTTpayment@hasil.gov.my

(h)

Will penalty be imposed on withholding tax payments which should be made during this period?

Payment of withholding tax which falls between 18 to 31 March 2020 can be made beginning 01 April 2020 up to 31 April 2020. No penalty will be imposed on late payment.

(i)

Will compound payment for Monthly Tax Deduction (MTD) which should be paid during this period be deferred?

Payment can be made before 30 April 2020.

REAL PROPERTY GAINS TAX (RPGT)

(a)

Is extension of time provided for the submission of RPGT return forms and payment?

For the submission of RPGT return forms and payment of RPGT (section 21B or payment of notice of assessment) where the due date falls within 18 March to 30 April 2020, the deadline for filing of the forms and payment is 30 April 2020.