Form C FY2025: 95 Days, One Reconciliation Trap, and the Surcharge That Has No Waiver

If your Sdn Bhd's financial year ended 31 December 2025, you have 95 days to file Form C — and the most expensive mistake you'll make won't happen on the deadline. It'll happen right now, in April and May, when founders receive their audited accounts, glance at the CP204 instalments they've been paying all year, and quietly assume everything will square up at filing time.

It doesn't always square up. And when it doesn't, the penalty is automatic, calculated in minutes, and — critically — there is no waiver mechanism.

This article walks through what Form C actually is, the binding deadlines for December FY companies, the reconciliation trap that catches SMEs off guard every single year, and the four things you should be doing in May rather than scrambling through in July.

What Form C Actually Is (and What It Isn't)

Form C is your company's annual income tax return — the document that tells LHDN what your Sdn Bhd actually earned, what expenses it deducted, and what the real tax liability is for the basis year. It is the definitive number.

Founders often confuse it with a few other forms that sound similar:

• CP204 — your estimate of tax payable, submitted before the year begins. You pay this in monthly instalments throughout the year.
• CP204A — a revision to that estimate, allowed in specific months during the year.
• Form E — the employer's annual return of employees' remuneration. Nothing to do with corporate tax.
• Form B — the individual income tax return for sole proprietors. Also not this.

Form C is the reconciliation moment: actual tax vs. the estimates you've been paying. Under s.77A(1) of the Income Tax Act 1967 (ITA 1967), every company must furnish Form C within 7 months from the close of its basis period. Under s.77A(1A) ITA 1967, filing must be done electronically — paper submissions are no longer accepted.

The Three Binding Deadlines for December FY Companies

If your FYE is 31 December 2025, here are the dates that govern your life for the next five months:

The e-filing grace of one additional month to 31 August is useful, but don't treat it as a target — treat it as a buffer for unexpected delays. The MITRS deadline (more on this shortly) is less well-known and catches companies completely off guard.

The CP204 / Form C Reconciliation Trap

This is the one that quietly costs founders real money every year.

CP204 is an estimate. You submitted it before your FY2025 even began — probably based on FY2024 numbers, or an educated guess at FY2025 profitability. You've been paying it in monthly instalments throughout 2025.

Now that the year is over and your audited accounts are done, you know the actual tax. The question is: how close was your estimate to reality?

Under s.107C(10) ITA 1967, if the tax charged under your Form C exceeds your CP204 instalments paid by more than 15%, LHDN imposes an automatic 10% surcharge on the shortfall. No appeal. No waiver. No "first offence" discretion.

Worked example:

Your company submitted a CP204 estimate of RM 50,000 for FY2025 and paid this in monthly instalments.

Audited accounts come in, and your actual tax liability per Form C is RM 80,000.

Shortfall = RM 80,000 − RM 50,000 = RM 30,000

Buffer test: RM 30,000 ÷ RM 80,000 = 37.5% — well above the 15% threshold.

Surcharge = 10% × RM 30,000 = RM 3,000 — automatic, filed alongside Form C.

Note the buffer test is calculated against the actual tax (Form C figure), not against the CP204 estimate. This is a common miscalculation. The denominator is what catches people: the 15% floor is 15% of your actual liability, not 15% of what you estimated.

A separate exposure exists under s.107C(3) ITA 1967: if your original CP204 estimate was already below 85% of the prior year's revised or original estimate, the surcharge can apply even before Form C is filed. Two distinct exposure points, same 10% surcharge mechanism.

The Three CP204A Revision Windows — and the One Nobody Tells You About

Under s.107C(5) ITA 1967, a company can revise its CP204 estimate upward during the basis year via Form CP204A. For a December FY company, the three revision windows are:

• 6th month → June
• 9th month → September
• 11th month → November

Most tax agents mention June and September. The November window is routinely overlooked — and for FY2025 December companies, it is now closed (November 2025 has passed).

If your FY2025 CP204A revision history shows no upward revision despite profits running ahead of estimate, and your Form C now reveals a 15%+ shortfall: the surcharge is already baked in. There is no retrospective fix at Form C stage.

If you are reading this in late April 2026 and this is landing uncomfortably — the immediate action is to quantify the exposure now, before filing, not after.

MITRS: The New YA 2025 Obligation Nobody Warned You About

Starting from Year of Assessment 2025, LHDN introduced the Malaysian Income Tax Reporting System (MITRS) — a mandatory online upload of supporting documents that must be completed within 30 days of your Form C filing.

This falls under the Filing Programme for Documents Specified Under s.82B ITA 1967 via MITRS. For a December FY company that files Form C by 31 August 2026, the MITRS upload deadline is 30 September 2026.

What you need to upload:

• Audited financial statements (signed accounts)
• Tax computation (the working file your tax agent prepares)
• Supporting schedules (capital allowance schedules, director fee reconciliation, group relief claims if applicable)

Where: MyTax portal, under the MITRS module.

This is a new compliance layer that many SMEs — and even some smaller practices — are still unaware of. Filing Form C on time and then assuming the job is done is a trap in itself. Non-submission carries its own penalty exposure.

Five Mistakes That Catch December FY Companies Out

1. Under-estimated CP204 with no revision filed.

Profits grew in FY2025 but nobody filed a CP204A in June, September, or November. The 10% surcharge under s.107C(10) now applies automatically at Form C stage.

2. "I'll just pay the balance when I file Form C."

This is the most common mental model — and it is incorrect. Paying the full tax with Form C does not extinguish the surcharge. The surcharge is calculated on the instalments shortfall during the year, not on whether you ultimately pay the right amount at filing.

3. Missing the MITRS upload.

Filing Form C and considering the job done — without uploading supporting documents to MITRS within 30 days — creates a fresh exposure under s.82B ITA 1967 obligations. It is a new requirement from YA 2025 and is not automatically handled by your e-filing submission.

4. Missing the 11th-month CP204A window.

For FY2025 December companies, the last opportunity to revise the CP204 estimate upward was November 2025. Many founders and some advisors are only aware of the June and September windows. If profits were running hot in Q3/Q4 and no revision was filed in November — that window is now gone.

5. Late Form C filing.

Failing to file by 31 August 2026 (e-filing deadline) triggers penalties under s.112 ITA 1967 — a fine of not less than RM 200 and not more than RM 20,000, or imprisonment, or both. Repeat or material non-compliance also carries prosecution exposure under s.120 ITA 1967. The lateness itself is a separate issue from any CP204 shortfall — they compound.

The 4-Step Pre-Filing Close-Off Sequence (Run This in May, Not July)

If your audited accounts for FY2025 are either just in or expected in the next few weeks, here is the sequence to run now:

Step 1 — Lock down audited accounts.

This is the input to everything. If your auditor hasn't signed off, that is the first dependency to clear. Don't wait until July to chase this.

Step 2 — Compute final tax liability.

Your tax agent (or internal accountant) should produce a complete tax computation based on signed accounts — capital allowances, unabsorbed losses if any, director fees, intercompany charges, controlled transactions if applicable. The output is your FY2025 chargeable income and tax liability.

Step 3 — Reconcile against CP204 instalments paid year-to-date.

Pull your CP204 instalment payment history from MyTax. Sum total CP204 paid. Compare against Step 2 liability. Apply the buffer test: shortfall ÷ actual tax. If that number exceeds 15%, the surcharge is already accruing — quantify it now, budget for it, and do not be surprised by it at filing.

Step 4 — Decide what this means for your filing strategy.

If the buffer test is breached: prepare Form C early, calculate surcharge, pay the full liability plus surcharge, and file before the August deadline. Confirm with your tax agent that the MITRS document pack is queued for upload within 30 days of filing. If there are other adjustments or discrepancies, assess whether voluntary disclosure under s.124 ITA 1967 is warranted before filing.

What to Do If You're Already Exposed

If you've run the reconciliation and confirmed the 15% buffer has been breached, the s.107C(10) surcharge is unavoidable. There is no waiver mechanism in the legislation and LHDN does not extend discretion at this provision.

What you can control:

• File early. Late filing compounds the exposure — s.112 penalty on top of the surcharge is an avoidable double hit.
• Voluntary disclosure under s.124 ITA 1967. If there are other adjustments or discrepancies beyond the CP204 shortfall, a written explanation submitted proactively is materially better than waiting for an LHDN audit to surface the same issue.
• Clean MITRS submission. A complete, on-time MITRS upload signals cooperation and reduces the likelihood of an audit follow-up on other matters.
• Fix CP204 for FY2026. If chronic under-estimation is the root cause, the FY2026 CP204 estimate (likely already submitted or coming up for a June revision) needs to be corrected before the same cycle repeats.

The downstream prosecution risk under s.112 and s.120 is materially reducible through prompt, correct action. The surcharge itself is not — but everything surrounding it is within your control.

The Bottom Line

December FY companies have 95 days from today to file Form C. That sounds comfortable. It isn't — because the real work (audited accounts, tax computation, CP204 reconciliation, MITRS document pack) needs to happen in May and June, not July. The companies that scramble in late July are the ones paying surcharges and penalties that were entirely avoidable.

If your FY2025 audited accounts are either just signed or coming in the next few weeks, right now is the moment to run the reconciliation, quantify any exposure, and build a clean filing timeline.

If you want Muchen to run the CP204 reconciliation, prepare your Form C, file via MyTax, and handle the MITRS upload — book a 15-minute call. We typically close out a December FY Form C package in 2–3 weeks once accounts are signed.

This article is general information, not legal or tax advice. Confirm with your tax agent or engaged counsel before acting on any of the above. Statutory references: s.77A(1), s.77A(1A), s.107C(3), s.107C(5), s.107C(10), s.112, s.120, s.124 Income Tax Act 1967; s.82B ITA 1967 (MITRS). LHDN references: Tax Estimation (s.107C) | MITRS Filing Programme YA 2026.