The Inland Revenue Board of Malaysia (LHDN) has issued close to 200,000 CP500 tax instalment notices to taxpayers, involving an estimated RM1.1 billion in taxes as of January 2026, according to the Ministry of Finance Malaysia (MOF).
In a written reply published on the Parliament of Malaysia website today, the ministry acknowledged concerns that some individuals who only earn salaried income had also received the CP500 notices.
MOF explained that LHDN’s review found certain taxpayers had inaccurately reported their income in their Income Tax Return Forms (BNCP), with portions of employment income mistakenly declared as non-employment income.
“As a result, enforcement measures are being taken to identify and cancel the CP500 notices issued to the affected taxpayers,” the ministry said.
No Penalty For 2026 Instalments
The clarification was made in response to questions from Lim Guan Eng (PH-Bagan) and Chong Chieng Jen (PH-Stampin), who sought details on the basis for issuing CP500 instalment notices, the number of taxpayers involved, and the projected tax collection.
For taxpayers with genuine non-employment income, MOF said the government has decided not to impose penalties if instalment payments under CP500 are not made throughout 2026.
Taxpayers are also advised to update their income reporting details in the BNCP for the Year of Assessment 2025 to avoid receiving CP500 notices in the future.
The development underscores the importance of accurate income declaration, as discrepancies in reporting categories can trigger unintended tax obligations under the instalment payment system.
