Many employers and finance teams are currently preparing for Malaysia’s e-Invoice implementation. During training sessions and discussions, one question appears repeatedly:

“If we already issue self-billed e-Invoices for commissions, do we still need to prepare CP58?”

The answer is yes.

Even if your company has implemented self-billed e-Invoices, the requirement to issue Form CP58 has not been abolished by LHDN.

For businesses that pay commissions to Agents, Dealers, or Distributors (ADD), CP58 remains an important compliance document that must be prepared every year.

In this guide, we explain what CP58 is, who must issue it, when it is required, and common compliance mistakes employers should avoid.

What Is Form CP58?

Form CP58 is a statement required by the Inland Revenue Board of Malaysia (LHDN).

It records the total income paid by a business to Agents, Dealers, or Distributors (ADD) within a calendar year.

Employers must prepare CP58 to summarise all payments made from 1 January to 31 December.

These payments may include both:

Cash Payments

Examples include:

• Sales commission

• Allowances

• Incentives

• Bonuses

Non-Cash Benefits

Examples include:

• Company cars

• Accommodation

• Travel packages

• Other incentives or rewards

The purpose of CP58 is to provide recipients with a formal record of their income, allowing them to report the correct amount in their personal tax filings.

Do Companies Need to Submit CP58 to LHDN?

No.

Unlike many other tax forms, CP58 does not need to be submitted to LHDN.

Instead, businesses must:

✔ Prepare the CP58 statement
✔ Provide it to the recipient
✔ Keep a copy for record purposes

The form must be issued to the Agent, Dealer, or Distributor before 31 March of the following year.

For example:

Income period: 1 January 2025 – 31 December 2025
CP58 issuance deadline: 31 March 2026

Failing to provide CP58 on time may create tax reporting issues for the recipient and potential compliance risks for the business.

If We Use Self-Billed e-Invoices, Do We Still Need CP58?

Yes.

The introduction of e-Invoices in Malaysia does not automatically remove CP58 obligations.

This is because:

• Many businesses have not fully implemented e-Invoice systems yet

• CP58 is still part of existing tax reporting requirements

• LHDN has not officially abolished the CP58 requirement

Therefore, even if your company issues self-billed e-Invoices for commissions, CP58 should still be prepared for the annual income summary.

In practice, this may result in additional administrative work, but it ensures compliance with current tax regulations.

When Is CP58 Required?

The requirement depends on the total annual income paid to the Agent, Dealer, or Distributor.

If Total Income Exceeds RM5,000

If the total commission or incentives paid during the year exceed RM5,000, the business must prepare CP58.

This applies even if self-billed e-Invoices were issued.

If Total Income Is Below RM5,000

If total income is below RM5,000, CP58 is generally not mandatory.

However, businesses may still prepare CP58 if:

• The Agent or Distributor requests it

• The company wants to maintain better documentation

Many accountants recommend issuing CP58 anyway as a supporting record for payment verification.

Who Should Receive CP58?

Businesses must provide CP58 to the following parties when commissions or incentives are paid:

• Agents

• Dealers

• Distributors

These groups are commonly referred to as ADD (Agent, Dealer, Distributor) in LHDN guidelines.

Should CP58 Be Prepared for Freelancers or Sub-Contractors?

Although not always mandatory, many tax advisors recommend issuing CP58 to:

• Freelancers

• Independent contractors

• Sub-contractors

This can serve as supporting documentation for payments made, especially when no invoice is issued by the recipient.

Maintaining proper documentation helps reduce the risk of tax disputes or audit queries.

Important Tax Rule: 2% Withholding Tax on High Commission Payments

Since 1 January 2022, LHDN introduced a rule affecting high commission payments to individual agents.

If a company pays more than RM100,000 in commission to an individual tax resident agent within a year, the company must apply 2% Withholding Tax (WHT) on future commission payments.

Example Scenario

Step 1 – Commission exceeds RM100,000

Date: 31 December 2024

Total commission paid to the agent during 2024 exceeds RM100,000.

Step 2 – Withholding tax applies next year

Date: January 2025

When the company pays further commission in 2025, it must deduct 2% withholding tax.

Example payment:

Commission payment: RM10,000

2% WHT deduction:

RM10,000 × 2% = RM200

Step 3 – Submit tax within 30 days

The withheld amount must be paid to LHDN using Form CP107D.

Deadline: Within 30 days of the payment date

Failure to comply may result in:

• 10% penalty

• Additional tax liabilities

• Commission expenses being disallowed for tax deduction

Why CP58 Is Important During a Tax Audit

Many companies underestimate the importance of CP58 until they face a tax audit.

During audits, LHDN often reviews expenses such as:

• Commission payments

• Incentive programs

• Sales agent payments

If a business reports large commission expenses, LHDN may request CP58 records as supporting documentation.

Without proper documentation, the authority may:

❌ Disallow the expense
❌ Add the amount back to taxable income
❌ Impose penalties

Having properly prepared CP58 forms helps demonstrate that the payments are legitimate business expenses.

How to Prepare Form CP58

Preparing CP58 is straightforward if businesses maintain proper payment records throughout the year.

Most companies prepare CP58 based on payment vouchers issued from January to December.

This helps ensure that the total commission amount matches the company’s accounting records.

Key Sections in Form CP58

Part A — Company Information

This section contains the company’s basic details, such as:

• Company name

• Tax reference number

• Business address

Part B — Recipient Information

Information about the Agent, Dealer, or Distributor:

• Name

• Identification number or company registration

• Address

Part C — Income Details

This section records all payments made during the year, including:

• Commission

• Incentives

• Allowances

• Bonuses

The amounts reported should match the company’s accounting and payment records.

Important Deadline: 31 March

Once the CP58 form is completed, businesses must issue it to the recipient before 31 March of the following year.

For example:

Income period: 2025
CP58 deadline: 31 March 2026

Businesses should avoid preparing the form and forgetting to distribute it, as the purpose of CP58 is to ensure recipients have their income records for tax reporting.

Best Practices for Employers

To reduce compliance risks, employers should:

✔ Maintain detailed commission payment records
✔ Track annual payments to each Agent, Dealer, or Distributor
✔ Monitor when payments approach RM100,000 thresholds
✔ Ensure withholding tax rules are applied correctly
✔ Prepare CP58 forms early before the 31 March deadline

Good documentation helps protect businesses during tax audits and compliance reviews.

How Pandahrms Helps Businesses Manage Payment Records

Tracking commission payments manually can be difficult, especially for businesses with large sales networks or multiple agents.

An integrated HR and payroll system helps companies maintain accurate records and organised documentation.

With Pandahrms, businesses can:

✔ Maintain organised employee and payment records
✔ Track allowances, commissions, and incentives
✔ Generate payroll and financial reports for compliance
✔ Reduce manual administrative work

Having structured records makes it easier for finance teams to prepare CP58 statements and respond to tax audit requests.