Partnership Tax in Malaysia: Form P Explained

By Axecta Management Services, Kuala Lumpur · Last verified: 29 October 2026

How partnership taxation works

In Malaysia a partnership is not taxed like a company. LHDN’s materials on Form P and the CP30 apportionment statement describe the position this way: the business profits of a partnership are not taxed at the partnership level but in the hands of each partner, based on their share. The partnership still has a filing duty, because LHDN needs one document that reports the partnership’s income and shows how it is divided. That document is Form P.

So there are two layers of paperwork:

1. The partnership’s return (Form P), filed once for the partnership.
2. Each partner’s own return (Form B for a resident individual who carries on business), which includes their share of the partnership’s income. See sole proprietor tax and Form B for how an individual’s business return works.

LHDN’s income declaration page covers the individual return; a company’s return is described on its company tax page. A partner who is a company would include the share in the company’s Form C. Check LHDN’s materials for how a corporate partner is treated.

Who files Form P, and who is the precedent partner

The precedent partner is the partner who is responsible for the partnership’s compliance. In LHDN’s Form P and CP30 materials, the precedent partner fills in Form P and issues a CP30 to each partner, and issues an amended CP30 if the distribution of income changes. In practice, partners should agree in writing who holds that role, because the legal exposure for a missed filing falls on the people responsible for the form.

Due date, e-Filing and the offence

LHDN’s Return Form Filing Programme for 2026, published 30 December 2025 and updated 1 April 2026, lists:

Two details deserve attention. First, for Form E and Form P the programme says action for failure to furnish is under section 120(1), while for most other returns it is section 112(1) or a penalty under section 112(3). Second, the programme says the grace period for payment of the balance of tax does not apply to Form P. Partnerships do not pay a balance of tax as such, because the tax sits with partners, but each partner should not assume the grace period shifts their own payment. The partners’ own returns have their own dates: 30 June for Form B, per the same programme.

Step by step: partnership tax cycle

1. Register the partnership with LHDN. LHDN’s e-Daftar page covers partnerships. The documents listed are the SSM business registration certificate and a list of partners. LHDN says to expect the reference number within 3 working days after a complete online application.
2. Keep partnership books separate from the partners’ personal accounts.
3. Close the year and prepare the profit and loss account and the capital allowance schedule.
4. Compute the partnership’s adjusted income using the same logic as for other businesses. See which expenses are deductible.
5. Apportion the income between partners according to the profit-sharing ratio and any partner benefits, using the CP30.
6. File Form P through MyTax by the due date.
7. Give each partner their CP30 so they can complete their own return.
8. Partners file their own returns, including their share, by their own deadline.
9. Keep the records for seven years.

Worked example (illustrative)

This is an illustration with round numbers. Three partners run a consultancy. For the year, the partnership’s adjusted income after capital allowances is RM200,000. The partnership agreement splits profit 50%, 30% and 20%.

Partner A files Form P and issues three CP30 statements. Each partner then enters their figure in their own Form B, along with other income such as salary or rent, and applies their own reliefs. If Partner C also earns employment income elsewhere, the RM40,000 is added to that. Because tax is calculated per person, the total tax across the three partners will differ from what a single taxpayer earning RM200,000 would pay. We have not applied individual rates because the rate table must be checked on LHDN’s current pages for the year of assessment.

Now change one fact: in the middle of the year Partner C’s share is increased to 30% and Partner B’s reduced to 20%. The precedent partner must reflect the change correctly and, if CP30s have already been issued, issue amended statements. The partnership agreement should record the change with its effective date.

Losses

If the partnership makes a loss, the loss is also apportioned through the CP30 to partners. How a partner can use that loss against other income is a question of the Income Tax Act and LHDN’s rulings, and depends on the partner’s circumstances, so ask an adviser before assuming it can offset a salary. LHDN’s public rulings on partnership taxation (the Part I and Part II rulings issued in December 2021) set out how the existence of a partnership is determined and how income is computed and allocated; read them on LHDN’s public rulings page if your arrangement is unusual, for example a co-ownership or a family arrangement without a written agreement.

Preparing partnership accounts

• Keep partnership books separate from the partners’ personal records.
• Record the profit-sharing ratio in the partnership agreement and document any change with its date.
• Prepare a profit and loss account and a schedule of capital allowances.
• Reconcile each partner’s capital and current accounts.
• Record salaries, interest on capital or other partner benefits clearly, because these affect how income is apportioned.
• Keep partner drawings separate from business expenses.

Penalties and records

LHDN’s offences, fines and penalties page does not list a Form P specific penalty, so we do not quote an amount here. What the page does state includes: not reporting actual income or giving incorrect information is an offence under section 113(1) with a fine of RM1,000 to RM10,000 plus 200% of the tax undercharged. The programme’s guide notes say Form P default is dealt with under section 120(1). Records follow the general rule in LHDN’s individual FAQ: seven years from the year the return is submitted, with documents kept rather than submitted. Failing to keep proper records is an offence under section 119A. See tax record-keeping requirements.

Employees and other taxes

A partnership with no employees is exempt from the CP8D employer listing, according to the programme’s guide notes. With employees, it files Form E by 31 March and remits PCB. E-invoicing and SST depend on turnover and activity, not on being a partnership; businesses below RM3,000,000 are exempt from e-invoicing. See tax obligations by business type.

Partnership, LLP or Sdn Bhd

A general partnership gives partners unlimited personal liability for the firm’s debts. An LLP gives partners limited liability, needs at least two partners and a compliance officer, is registered with SSM and files its own annual declaration, and files Form PT for tax. A Sdn Bhd is a separate legal entity with its own tax return and rates. See what is an LLP in Malaysia, LLP vs Sdn Bhd and Sdn Bhd vs LLP vs sole proprietorship.

Common mistakes

• Nobody owns the filing. Appoint the precedent partner in writing.
• Partners forgetting to declare their share. The CP30 is not the partner’s tax return.
• Changing the ratio informally. The CP30 and the agreement must agree.
• Mixing partner drawings with expenses.
• Assuming the partnership pays the tax.
• Filing the partners’ returns before Form P is final.
• Using last year’s dates. Open the current programme.

How Axecta helps

Axecta prepares the partnership accounts and Form P, produces the partner statements, helps each partner declare the share in their own return, and keeps a filing calendar. If the partners are ready to move to an LLP or Sdn Bhd, our incorporation team can handle it. See our tax compliance and filing service.

Next steps

1. Confirm who the precedent partner is and record it.
2. Check the partnership has an LHDN number and MyTax access.
3. Agree the profit ratio in writing and keep it current.
4. Schedule Form P and the partners’ returns ahead of 30 June.
5. Decide whether the structure still suits you.

Frequently asked questions