Cooperative Income Tax: Form C1, Rates & 5-Year Exemption

# Cooperative Income Tax: Form C1, Rates & 5-Year Exemption

A cooperative registered with the Suruhanjaya Koperasi Malaysia (SKM) is a separate taxpayer under the Income Tax Act 1967 (ITA 1967). This article explains Form C1, cooperative tax rates, the exemption for the first 5 years and the treatment of dividends to members.

Updated: 8 November 2026 — Independently fact-checked.

Review date: 8 November 2026
Year of assessment: All YA (ITA 1967 provisions); cooperative rates categories A–H — refer to the current official LHDN schedule
Status: Published

Do cooperatives pay tax?

Yes. A cooperative registered with the Suruhanjaya Koperasi Malaysia (SKM) is a separate taxpayer under the Income Tax Act 1967 (ITA 1967). Cooperatives do not use Form C — they file Form C1 (cooperative return) and use cooperative tax rates, which are separate from company rates.

Source: HASiL — Form C1 Handbook; IKMA (Cooperative College) — Dimensi Koop (see Official sources section).

Registration and estimates

Tax file registration: cooperatives register through LHDN e-Daftar/e-Kemaskini or over the counter, with a copy of the SKM registration certificate, the by-laws, and Form CP600CS (Application for Registration of a Cooperative Income Tax File).

Tax estimates: submitted via e-CP204. New cooperatives — within the first 3 months of operations; existing cooperatives — no later than 30 days before the basis period begins (in line with s.107C ITA).

Amendments: amended cooperative returns — BNT CS.

Source: IKMA — Dimensi Koop; HASiL — Form C1 Handbook; Angkasa — Form CP600CS (see Official sources section).

Exemption for the first 5 years

Cooperative income is exempt for the first five (5) years from the date of registration with SKM — sub-subparagraph 12(1)(a), Schedule 6, ITA 1967.

Source: HASiL — Form C1 Handbook (see Official sources section).

Cooperative tax rates — this matter still awaits official HASiL confirmation — re-check with HASiL before making decisions.

Cooperative tax rates differ from company rates; they are based on chargeable income bands (categories A–H): 0% for the first RM1–RM30,000; subsequent tiers of 5%, 10%, 15%, 18%, 21%, 23% up to 24% for income above RM750,000. This schedule is as reported in IKMA's 2022 publication — verify with the current official LHDN schedule before publishing. This matter still awaits official HASiL confirmation — re-check with HASiL before making decisions.

Source: IKMA — Dimensi Koop Bil. 73 (2022) (see Official sources section).

Dividends to members

Dividends from a cooperative to its members are exempt in the hands of the recipient (see the cooperative dividend brief); tax is paid at the cooperative level.

Items to confirm before publication — this matter still awaits official HASiL confirmation — re-check with HASiL before making decisions.

The current cooperative rate schedule (0–24%) — copy in the IKMA publication (2022); verify the current official LHDN schedule before publishing.
Dates of the annual cooperative e-Filing programme (e-C1; YA 2026 closing date) — check the annual Filing Programme (FLAG-3).
The 5-year exemption period for cooperatives registered after a certain date (if there is any change).
Details of the current version of Form C1 (Pin.) and e-C1 in MyTax.

Caveats

Distinguish cooperative rates (0–24% bands) from company rates (17%/24% PMKS) — do not mix them up.
Do not invent schedule figures; refer to the current official schedule.