Zero CP500 Penalties for Salaried Individuals in 2026 - What You Should Know

By: Winnie Foo, Director ; Windy Sim, Manager

In December 2025, many individual taxpayers earning only employment income were surprised to receive Instalment Payment Notices (“CP500”) from the Inland Revenue Board (“IRB”).

What is CP500?

CP500 is a bi-monthly tax instalment notice for individuals earning non-employment income such as business profits, rental, interest, royalties, etc. as these are not covered by monthly tax deductions (MTD).

Salaried individuals typically do not need to comply with CP500 instalment payments. However, recent complaints show that some CP500 notices were issued due to misclassification of income in tax returns.

What Should You Do?

Employment income only

If you received CP500 but earn only employment income, you are not required to pay.

Submit an Application Form for Amendment of Instalment Payments (“CP502”) together with Form EA/EC (Statement of Remuneration from Employment) to mejabantuanCP500@hasil.gov.my to correct the record.

Both Employment & Non-Employment Income

CP500 splits estimated tax into six instalments from March to January of the following year. Payments must be made within 30 days of each due date. Normally, failing to pay will incur a 10% penalty.

For Year of Assessment (YA) 2026, the IRB announced no penalties during a transition period, though voluntary payments are encouraged. Amendments to instalment amounts can be made twice via CP502 by 30 June 2026 and 31 October 2026.

Accurate reporting prevents unnecessary complications. Understand your tax obligations to stay compliant.

Need assistance? Contact us at PKFTAX@PKFMalaysia.com