What is CP58 ?
CP 58 form is not a tax filing form. It is an income statement that shows the income of incentives, allowances, bonuses, etc. for agents, dealers and distributors, similar to the EA form received by employee.
Pursuant to Section 83A(1) of the Income Tax Act of 1967, as of January 1, 2012, each company must prepare and provide the CP 58 form to its agents, dealers and distributors (hereinafter referred to as agents) by March 31 of each year in accordance with the format required by LHDN.
Who are required to file CP58 form?
The Inland Revenue Board of Malaysia (IRBM) stipulates that if the company pays more than RM5,000 in cash or non-monetary incentives to the agent during the calendar year, they must prepare the CP58 form for each agent. These forms do not have to be submitted to the tax office, but if the tax office requires all information on the rewards paid, the company must provide all incentive payment information, including awards worth less than RM5,000.
What rewards must be reported?
The agent’s reward payments for achieving performance are mainly divided into two categories: cash reward & non-cash incentives. Cash Reward includes basic allowances, commissions, or bonuses. If the company provides cash incentives to the agent, it must report the actual amount paid in the CP 58 form.
Material non-cash incentives includes incentives, tour packages, tickets accommodation, car, house and so on. For non-cash rewards, the company must prepare the CP 58 form based on the actual cost.
Which rewards do not have to be reported?
- Trade discounts and bulk discounts provided by the company
- Promotional items or gifts which are not stated in the agency contract
- Incentives given for an open invitation to encourage the public or customers to introduce more customers
- Provide special discount rates to independent agents
- Subcontract payment
- Handling fee
- Credit rebate
- Free items that are not based on performance, such as umbrellas, pens, and calendars
When is the due date to provide CP 58 form?
The Form CP 58 shall be provided to the agent, dealer, or distributor not later than 31 March in the year immediately following the year in which the incentives mentioned above are paid.
