Dormant Company in Malaysia? Why You May Still Owe LHDN — and What to Do About It

This situation arises more often than directors expect: a company dormant since 2019, no Form C ever filed, a CP270 penalty notice for more than RM10,000. By the time the notice arrives, the remediation chain is already long — and the cost of resolving it is significantly higher than it would have been if the company had been closed properly from the start.

The Misconception That Causes This

Most directors with dormant companies operate on the same assumption: no activity means no obligation. That assumption is incorrect — and LHDN's enforcement position under Section 90(3) of the Income Tax Act 1967 makes the consequence of that assumption expensive.

LHDN does not automatically know your company is dormant. In the absence of a Form C submission, silence is treated as non-compliance, not inactivity. The same applies to EPF and SOCSO — neither authority automatically deregisters a company because it has ceased operations.

What Is a CP270 and How Is It Triggered?

A CP270 is a penalty notice issued by LHDN. When a company fails to submit Form C, LHDN is empowered under Section 90(3) of the Income Tax Act 1967 to raise a best-estimate assessment of the company's income. The estimate is LHDN's determination — not the company's declaration. Once issued, the burden shifts entirely to the company to dispute it. The CP270 is the penalty notice that follows that assessment.

What Dormant Companies Are Still Required to Submit

LHDN's official website states explicitly:

"Companies, limited liability partnerships, trust bodies and cooperative societies which are dormant and/or have not commenced business are required to furnish the ITRF (including Form E) with effect from Year of Assessment 2014."
Source: hasil.gov.my/en/company/

Two separate filing obligations apply to every dormant company in Malaysia:

• Form C (company income tax return) — required every year since the company was incorporated. The YA 2014 starting point does not apply to Form C. A company incorporated in 2010 that has been dormant since inception is required to have filed Form C for every year from its first year of assessment.
• Form E (employer's return) — required for dormant companies from YA 2014 onwards, per LHDN's official website. This obligation applies regardless of whether any business was conducted or any employees were on payroll.

Both obligations continue for as long as the company remains registered with SSM. Deregistration with SSM does not happen automatically — it requires a formal strike-off application, which itself can only be made after all filing and payment obligations are resolved.

The Remediation Chain — Once a CP270 Has Been Issued

A CP270 is not the end of the problem. It is the beginning of a remediation process that involves multiple authorities, each with their own requirements and timelines:

1. Respond to the CP270 — dispute or settle within the stipulated deadline. Ignoring it increases the liability and reduces the options available.
2. Prepare accounts and file outstanding Form C for all unfiled years since incorporation, with supporting financial statements.
3. File outstanding Form E for all years from YA 2014 to the current year in which the company remains registered.
4. Clear all outstanding tax liabilities and formally close the LHDN income tax file.
5. Close the EPF file — formal deregistration is required even if no contributions were ever made.
6. Close the SOCSO file — same requirement applies. Silence is not deregistration.
7. Apply for SSM strike-off — only after steps 1 to 6 are fully completed. SSM will not approve a strike-off where outstanding statutory obligations remain unresolved.

The Correct Sequence — Before a CP270 Arrives

If your company is dormant and you have not yet received a penalty notice, the window to resolve this cleanly is still open. Acting now means the company controls the timeline and the cost. Acting after a CP270 means responding to LHDN's timeline and LHDN's estimate. The correct sequence is:

1. Prepare final financial accounts for all outstanding years
2. File all outstanding Form C returns for every unfiled year since incorporation
3. File all outstanding Form E returns from YA 2014 onwards
4. Settle any tax liability and obtain formal closure of the LHDN tax file
5. Close EPF and SOCSO files
6. Apply for SSM strike-off — last step only

Key Facts Summary

Item	Position
Form C obligation — dormant company	Required every year since incorporation
Form E obligation — dormant company	Required every year from YA 2014 onwards
LHDN power when Form C not filed	Section 90(3) ITA 1967 — best-estimate assessment
Penalty notice type	CP270
SSM strike-off — when to apply	Only after LHDN, EPF and SOCSO files are closed

Sources

• Section 90(3), Income Tax Act 1967
• LHDN official website — Company taxpayer responsibilities: hasil.gov.my/en/company/
• ITRF Filing Programme: hasil.gov.my

Need Help?

KS Chia & Associates handles the full remediation process for dormant companies — accounts preparation, Form C filing for all outstanding years since incorporation, Form E filing from YA 2014 onwards, LHDN tax file closure, EPF and SOCSO deregistration, and SSM strike-off coordination.

WhatsApp or call: 011-2366 5233
KS Chia & Associates (AF001828)