“Any person who is authorized by a company to act as its agent, dealer or distributor, and who receives payment (whether in monetary form or otherwise) from the company arising from sales, transactions or schemes carried out by him as an agent, dealer or distributor.” is required to issue a Form CP58 LHDN | Form 58 | CP 58 on any incentives (whether in monetary form or otherwise).
Note: This applies to even a foreign company and foreign branch which operates in Malaysia BUT excludes those individuals carrying out a business or under partnership.
Form CP58 – statement of monetary and non-monetary incentive payment to an agent, dealer or distributor
Form CP58 LHDN | Form 58 | CP 58 only need to be prepared for those recipients where the monetary and non-monetary incentive payment are of an amount exceeding RM5,000 per annum. For non-monetary incentives such as motor vehicle or house, the actual value/amount incurred by the payer company will be the incentive deemed received by the recipient.
Incentives which are not required to be disclosed in the Form CP58 LHDN | Form 58 | CP 58 include:
- trade discounts and bulk discounts;
- promotional items/gifts received which are not stipulated in the contract;
- incentives are given for an open invitation to encourage the public/ customers to introduce more customers;
- special treatment in the form of preferential rate given to an independent agent who buys and sells goods on his own accord. He is a customer to the producers/wholesalers, except that he enjoys preferential rate due to his purchasing power;
- credit rebate – i.e. Company selling products to supermarkets, sundry shops, minimarkets, etc. The company gives customers a credit rebate (credit notes to offset their account) when they make a prompt payment & hit the yearly target/quota;
- handling fees (i.e. loading and unloading of goods or luggage, etc) – i.e. company is in the air transport business and sells air tickets to travelers. The company sub-contracts its ground handling services to an agent. The agent solely provides ground-services and does not sell air tickets to travelers. The agent is merely a sub-contractor to the company and merely receives handling fees; and
- items such as umbrellas, pens, calendars, etc. given to all agents, dealers, and distributors which are not based on performance.
Example of Form CP58
Form CP58 LHDN | Form 58 | 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. Any payer which fails to prepare Form CP58 LHDN | Form 58 | CP 58 as required under this Section shall be guilty of an offense and shall, on conviction, be liable to a fine of not less than RM200 and not more than RM 2,000 or to imprisonment for a term not exceeding 6 months or to both.
The latest version of the Form CP58 LHDN | Form 58 | CP 58 in PDF and Excel format together with the Guidelines are available at the Inland Revenue Board Malaysia.
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