On 5 January 2026, Lembaga Hasil Dalam Negeri Malaysia (HASiL) announced an important concession following the New Year Address 2026.

Many individual taxpayers who received CP500 instalment notices, especially salaried employees with some side income, were concerned about penalties.

The Government has now confirmed that no penalty will be imposed in 2026 for non-payment of CP500 instalments for certain individuals. This is a transition measure, not a permanent change.

This article explains what was announced, who is affected, the practical implications, and what still needs clarification.

Based on HASiL’s announcement :

• No penalty will be imposed in 2026 for non-payment of CP500 instalments.
• The concession mainly targets individuals with employment income and additional non-employment income such as rental, interest, royalties, or freelance income.
• Taxpayers with only employment income do not need to comply with CP500, but must ensure their tax return is filed correctly.
• Voluntary payment of CP500 is encouraged to reduce future lump-sum tax payments.
• Taxpayers should update their 2025 tax return properly to avoid unnecessary CP500 in future.
• CP500 amounts can be amended via CP502 by 30 June 2026 (first amendment) and 31 October 2026 (second amendment).