KUALA LUMPUR: The SME Association of Malaysia has urged the government and the Inland Revenue Board to reconsider the CP500 instalment requirement for salaried individuals and retirees, saying it imposes an unfair prepayment burden on those with small or irregular non-employment income,
The Edge Malaysia reported recently.
Its national president Dr Chin Chee Seong said CP500 should not be extended to salaried taxpayers already covered under the PCB system, particularly where side income such as rentals or freelance work is minor or sporadic.
Advertisement
He also called for exemptions for retirees who undertake occasional advisory or consultancy work, noting that many no longer have stable monthly income and rely on unpredictable engagements.
Chin said CP500 should remain focused on taxpayers whose main income comes from non-employment sources, adding that applying advance tax instalments to unstable side incomes often leads to inaccurate estimates, higher compliance costs and unnecessary financial strain.
While welcoming a one-year penalty waiver announced by the IRB, he said the core issue lies in policy design, warning that forcing tax payments before income is earned undermines fairness, weakens public trust and risks discouraging voluntary compliance amid rising living costs.
