What Is CP500? A Guide for Businesses and The Self-employed

CP500 is an advance tax instalment scheme by LHDN for individuals earning income not deducted through the Monthly Tax Deduction (PCB) system. 

It primarily affects self-employed persons, freelancers, property owners, and anyone earning commissions or side business income.

If you’ve recently received a Notis Bayaran Ansuran CP500, this guide from the best accounting firm will help you understand what it means, how payments work, and how to make revisions if your income changes in 2025.

What Is CP500 and Who Receives It?

CP500 is an advance tax instalment notice for individuals who earn non-salary income.

It is automatically issued by LHDN to those who submitted Form B in the previous year. This includes:

• Sole proprietors and small business owners.
• Freelancers and gig workers.
• Property owners with rental income.
• Side Income also counts
• Commission-based professionals (insurance, real estate, or finance agents).

You receive CP500 because your income isn’t covered by monthly deductions from an employer. LHDN estimates your expected income tax for the year and asks you to pay it gradually.

For instance:

• A Grab driver declaring part-time earnings may get a CP500 notice in the following year.
• A property owner renting out two apartments in Johor Bahru will receive CP500 once rental is declared under Form B.
• A sole proprietor selling online via Shopee or TikTok Shop is also included.

How Does CP500 Work in 2025?

CP500 breaks your annual tax estimate into six instalments due every two months.

Each instalment equals one-sixth of your estimated annual tax. You’ll usually receive your first notice in February or March, with the following payment schedule:

Important notes: 

• Payments must be made within 30 days of each due date.
• Late or missed payments trigger a 10 % penalty.
• If your income changes, you can revise the remaining instalments through Form CP502.

If you prefer specific dates for planning, use the 30th as a guide! For example 30th March, 30th May, 30th July and so on.

CP500 vs CP204: What’s the Difference?

While both CP500 and CP204 involve tax instalments, they apply to different taxpayer categories.

In short:

• CP500 = personal instalment for individuals with non-salary income.
• CP204 = corporate instalment for registered companies.

How to Pay CP500 (MyTax & ByrHASiL Options)

You can pay CP500 online through LHDN’s official channels.

1. Through MyTax

1. Visit MyTax Portal.
2. Log in with your identification number (IC/Passport).
3. Go to e-Bayar → select CP500 – Bayaran Ansuran.
4. Enter the payment amount and confirm via FPX banking.

2. Through ByrHASiL

1. Go to ByrHASiL portal.
2. Choose CP500 payment type.
3. Fill in your Tax Reference Number and IC.
4. Complete payment through FPX or credit/debit card.

3. Other Options

• Payment over the counter at POS Malaysia or LHDN branches.
• Appointed banks such as Maybank, CIMB, or Public Bank also accept CP500 payments.

Always use the correct payment code (CP500) to ensure the amount is recorded under your tax account.

How CP500 Is Calculated 

CP500 is calculated based on your previous year’s declared income.

When you file Form B, LHDN uses that data to estimate the amount of tax you’ll likely owe for the current year. The figure is then divided into six equal instalments.

The estimate is based on your latest submitted Form B and may include your rental income, business profit, and commission combined.

Example 1 – Freelancer:

A freelance graphic designer declared RM 60,000 taxable income in 2024. 

Tax payable: RM 4,800 → six payments of RM 800 each.

Example 2 – Landlord

A property owner earning RM 3,000 monthly rental across two units declared RM 36,000 annual rent in 2024. 

Estimated tax: RM 1,560 → six payments of RM 260 each.

“In March 2025, the number of own-account workers (‘self-employed individuals’) was reported at 18.8 % of total employed persons in Malaysia.” –  DOSM, Labour Force Statistics for March and Q1 2025

What If Your Income Drops? (Using CP502 to Revise)

Form CP502 lets you revise your CP500 instalments if your income decreases.

For example, if your freelance earnings fall mid-year or your business experiences slower months, you can file Form CP502 to lower future payments.

Here’s how it works:

1. Download or access Form CP502 via the MyTax portal.
2. Submit before the next instalment is due.
3. Provide your new estimated income and justification.
4. LHDN will adjust the remaining instalment amounts.

This prevents you from overpaying taxes or waiting until tax season for a refund. However, if you underestimate significantly without proper reason, LHDN may review or reject the revision.

What Happens If You Overpay or Stop Earning Income

If your income decreases or you stop earning mid-year, you can request a revision or refund.

To check refund status:

• Log in to MyTax → ezHasil Services → Refund Status.
• Ensure your bank details are listed under “Individual Profile” → “Update Bank Account.”

Overpayment: Any excess will be credited once you submit your Form B for that year. Refunds are typically processed within 30 working days if your bank details in MyTax are correct.

Business closure or no income: File Form CP502 immediately to cancel upcoming instalments and prevent penalties. Supporting documents (such as SSM cessation letters or closure notices) may be requested by LHDN.

Temporary slowdown: You may reduce your estimate instead of cancelling entirely, ensuring you pay only what’s necessary.

Read more: Salary vs Dividends: Tax Implications for Business Owners

What To Do If You Miss a CP500 Payment

Missing a CP500 instalment doesn’t mean you’re in trouble, but it does require quick action.

1. Pay immediately through MyTax or ByrHASiL to reduce potential penalties.
2. Check payment status under “CP500 Statement” in MyTax to confirm it’s credited.
3. Expect a 10 percent surcharge on unpaid balances if the payment exceeds the 30-day window.
4. Appeal if justified: If a delay was due to system errors or verified bank issues, you can appeal via your nearest LHDN branch.
5. Keep receipts: Store payment proofs for audit or future disputes.

Common CP500 Mistakes and How to Avoid Them

Most CP500 issues happen because taxpayers misunderstand how the system works, not because they’re careless. If you’ve ever thought or said something like the examples below, you’re not alone, but here’s how to fix them.

“I didn’t know I had to pay this, I already pay PCB at work.”

Many employees with side income think CP500 doesn’t apply to them. It does. 

If you earn extra through:

• Freelancing
• Commissions
• Property rental

LHDN treats that as separate income under Form B, and CP500 covers that portion.

“I didn’t realise there was a 30-day deadline.”

Each instalment must be settled within 30 days of the notice date. 

Missing it triggers a 10 percent penalty automatically. Add payment reminders to your phone calendar or MyTax alerts to stay ahead.

“I didn’t choose the right option when paying online.”

When using FPX or online banking, always pick ‘CP500 – Bayaran Ansuran’ as the payment type. 

Selecting generic tax codes like “Cukai Pendapatan” or “CP204” can delay crediting and create reconciliation issues in MyTax.

“I didn’t bother revising when my income dropped.”

If your income decreases, file Form CP502 immediately. Otherwise, you’ll overpay and wait months for a refund after filing Form B. 

Revising early helps preserve cash flow and prevents unnecessary over-contributions.

“I didn’t keep any proof of payment.”

Audits or refund checks often require receipts. 

Always download the payment PDF or screenshot the confirmation page and store them in a folder labelled CP500 Payments 2025. Keep them for at least 7 years.

How to Stay Compliant and Organised

Treat your CP500 schedule like a business expense plan, because it is.

• Record all business and rental income monthly.
• Automate reminders for every instalment date.
• Save payment receipts digitally for easy audit reference.
• Consider using cloud accounting software for consistent tracking.
• If uncertain, consult a licensed tax agent for accurate forecasting.

By staying organised, you’ll prevent financial surprises and maintain good standing with LHDN.

Why CP500 Matters for Your Tax Planning

CP500 is more than just a tax notice, it’s part of Malaysia’s structured approach to help self-employed individuals, property owners, and freelancers pay their income tax progressively instead of in one large lump sum.

Yet, it can be difficult to manage all of these taxes, especially for self-employed folks who already have to juggle with day-to-day affairs.

At Accounting.my, our licensed professionals specialise in:

• Tax computation
• CP500 and CP204 advisory
• Audit preparation
• Compliance reviews

Regardless if you’re a freelancer, landlord, or small business owner, we can help you calculate accurate instalments with our tax services, manage cash flow, and ensure your LHDN submissions are error-free.

Let our tax team handle the numbers, so you can focus on growing your business with confidence.

Source:

• LHDN, Tax Estimation Advance Payment, CP500 overview and 30-day payment window.
• LHDN, Sepintas e-Buku Hasil 2025, CP500 instalment months and notes.
• ByrHASiL portal, payments are processed via FPX.
• LHDN, Company Tax Estimation, CP204 monthly instalments and CP204A revision timing.
• DOSM, Labour Force Statistics March 2025, own-account workers level.
• Human Resources Online, summary citing DOSM, own-account workers 18.8%.