What Is Form CP58 and Do You Need to Prepare It?

Did you ever hear of Form CP58? It's not something many employers would know. In this article, we'll explain what Form CP58 is all about.

Form CP58 is not really a form!

Even though the Inland Revenue Board of Malaysia (IRBM) call it Form CP58, in reality, CP58 is more of a commission or fees statement that companies prepare for agents, distributors and dealers.

CP58 shows the income of incentives, allowances, and bonuses for agents, distributors and dealers, just like employees receiving EA form. 

Form CP58: What it is all about

Section 83A(1) of the Income Tax Act 1967 says that companies have the responsibility to issue and prepare form CP58 on any type of monetary incentive or non-monetary incentive payment to their agents, distributors or dealers. 

1. Monetary incentive: Cash reward paid to agents, distributors, or dealers. The payer company has to declare the full amount paid in Form CP58. For example, basic allowance, commissions, and bonuses. 

2. Non-monetary incentive: Companies must report the actual non-monetary incentive cost in Form CP58. For example, tickets accommodation, tour packages, car, house, gold and vouchers.

This is the latest version of Form CP58, you can download the form at the helpful links section below.

Who has to prepare form CP58?

A company that pays over RM5,000 per year in cash or non-monetary incentives to agents, distributors, or dealers must prepare Form CP58 for them. This requirement also applies to foreign companies and branch that operate in Malaysia but excluding individuals running a business or under a partnership. 

The only situation where a company has to prepare Form CP58 for incentives under RM5,000 is when the payee requests it. 

The company needs to keep a proper hand-over record. They must send the Form CP58 through registered postage or email. The company does not need to submit Form CP58 to IRBM, but if the tax office requests so, then the payer company must provide all incentive data. 

The payer company must keep the original copy of Form CP58 for seven years from the end of the calendar year in which they paid incentives to agents, distributors or dealers. The reason is for IRBM's reference and examination during a tax audit. 

The payer company should send a copy of Form CP58 to agents, distributors, or dealers.

CP58 deadline

The final date for the company to send Form CP58 is 31 March in the year immediately following the year the incentives are paid. 

Do you need to fill Form CP58?

There are two situations: 

Situation A: 

1. The company sells an item at RM10. 

2. Then, the agent sells the item to the buyer at RM10. 

3. The buyer then pays RM10 to the company's bank account.

4. There is no extra charge on the buyer.

5. The company pays the agent incentive. 

6. In this situation, the company must prepare Form CP58. 

Situation B:

1. The company sells an item to the agent at RM10.

2. The agent sells to a buyer at RM15.

3. The buyer pays RM15 to the agent.

4. There is an extra charge on the buyer.

5. The company does not pay the agent incentive, therefore no need for Form CP58.

6. The extra charge does not need to be included in Form CP58.

What is excluded from Form CP58?

• Trade and bulk discounts.

• Special discount rates for independent agents.

• Subcontract payment.

• Promotional items/gifts that are not written in the agent's contract. 

• Incentives given to the public/customers to encourage them to invite more customers, such as referral fee.

• Handling fee.

• Credit rebate.

• Free items that are not based on an agent's performance, e.g., notebook, pen, calendar, and umbrella.

• Special treatment in the form of a preferential rate given to independent agents who buy and sell goods on their own accord. 

What happens if you fail to provide Form CP58?

If a payer company fails to prepare Form CP58, they shall be guilty of an offence under Section 120(1)(b) of the Income Tax Act.

They are liable to a fine of RM200 to RM20,000 or imprisonment not exceeding six months or both. 

That's about it; it's tax season, so stay tuned for more articles on these tax filing forms! Thank you for reading!

Helpful links
Form CP58 in PDF
Form CP58 in Excel file 
Form CP58 Guideline 
Guideline on submission of CP58 information

Sources: IRBM, AMACC

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