- 1. Obligation To Declare Construction Work
Every contractor is required to declare and submit to CIDB, in the manner prescribed by CIDB, any construction work contract that has been awarded to the contractor..
- 2. Definition of “Contractor”
A contractor is a person who carries out or completes or undertakes to carry out or complete any construction work. Any person who has been awarded or has completed any contract for construction work, or has undertaken to carry out, manage or complete any construction work, or has carried out, managed or completed any construction work is deemed to be a contractor unless proven otherwise.
- 3. Definition of “Construction Work”
Construction work refers to the construction, connection, installation, repair, maintenance, renewal, relocation, modification, alteration, remodeling or demolition of:
- i. any building, construction, large building, structure, wall, fence or chimney whether built in whole or in part above or below ground level;
- ii. any road, port works, railway, cableway, canal or airfield;
- iii. any drainage, water lines or river control works;
- iv. any electrical, mechanical, water, gas, petrochemical or telecommunications works; or
- v. any bridge, viaduct, dam, reservoir, earthwork, pipeline, sewer, aqueduct, culvert, drive, shaft, tunnel or reclamation work, and includes:-
- any work that forms an important and integral part or is preparatory or temporary for the works described in paragraphs (I) to (V), including site clearing, land research and improvement, soil transfer, excavation, foundation stone laying , site restoration and landscaping; or
- acquisition of construction materials, equipment or workers necessary for any work described in paragraphs (I) to (V).
- 4. Contract Amount
The total contract in relation to a construction project is the total value of all works, supplies and services to make and make the construction work in the construction project fully functional covering the following items:
- i. Cost of acquisition of materials, equipment, workers;
- ii. The cost of equipment, machinery and installed furniture purchased domestically or abroad;
- iii. Project management costs;
- iv. Project financing costs (Financial Costs);
- v. Prime Cost Money;
- vi. Temporary Allocation Money;
- vii. Facility Management (Facility Management);
- viii. Professional Fees (Professional Fees);
- ix. The cost of any work that forms an essential part or is preparatory or temporary for the work contract being executed; and
- x. Any taxes contained in the contract
- 5. The declaration is considered as true
All construction work declarations made through the CIMS system are considered true. The owner and director of the company will be fully responsible for the declaration made and may be subject to any action if CIDB finds any fault in the declaration.
- 6. Declaration Document
The declaration of any construction work must be accompanied by a document containing full details regarding the completion of the construction work through the following documents:
- i. Acceptance Letter/ Award Letter (Letter of Award); or
- ii. Contract signed by both parties; or
- iii. Any document related to the acceptance or completion of the contract on construction work
Examples of construction work declaration documents are as follows:
- i. Acceptance letter or award letter from the client; or
- ii. A signed contract document; or
- iii. Contractor's All Risk Insurance (CAR); or
- iv. Details and information regarding the consideration in relation to the completion of any contract on any construction work contained in any relevant document.
- v. Statutory Declaration
- 7. Construction Work Declaration Time Duration
The contractor is required to declare and inform CIDB of any construction work within 14 days after being awarded the construction work contract or 14 days before carrying out the construction work, whichever is earlier.
- 8. Method To Declare Construction Work
The contractor is required to declare the construction work entirely online through the CIMS System (https://cims.cidb.gov.my) and submit supporting documents as stated in paragraph 6. Any declaration received manually is considered invalid.
Impostion of Levy
- 1. Levy Rates
A levy of 0.125% is imposed on the total value of the construction work that exceeds five hundred thousand ringgit.
- 2. Payment Review
Contractors may check the amount payable through the Levy Imposition Notification Form, which is CIDB Form L2/96 that will be automatically generated by the CIMS system. Contractors can also print CIDB Form L2/96, check their levy payment status and list of construction works that have been notified to CIDB through the online system, by accessing here.
- 3. Payment Period
The levy payment must be cleared within 30 days from the date CIDB Form L2/96 is issued.
- 4. Method of Payment
Contractors are required to fill in the Levy Payment Form* and pay the levy amount charged at any CIDB State/Branch office finance counter via:
- Banker's Check (Banker's Cheque); or
- Bank Draft (Bank Draft)**
- Debit Card
- Internet Banking
- Postage (Postal Order);
- Electronic Funds Transfer (EFT)
- i. Attach CIDB Form L2/96
- ii. Payment for the above must be placed in the name of the Malaysian Construction Industry Development Board or CIDB Malaysia.
- 5. Levy Exemption
Levy exemptions are only given to housing projects as below;
- i. Low Cost, Medium Low Cost and Medium Cost Housing Projects with selling prices not exceeding RM100,000.00 per unit.
- ii. Housing projects that use more than 50% of Industrialized Building System (IBS) components.
- Levy exemption for housing projects that use IBS must undergo a site inspection and be certified by CIDB. Exemption applications without such verification documents will be REJECTED
- 6. Changes in the Value of Construction Job
Any change in the value of the contract must be notified to CIDB together with documentary evidence related to the change issued by the client or consultant. This notification is also done through the CIMS system.
- 1. Failure to Declare a Construction Work Contract
The contractor will be fined not more than fifty thousand ringgit if he does not declare and submit the awarded construction work contract or if he does not fully disclose all the facts and circumstances of his liability to pay the levy to CIDB.
- 2. Notice of Demand
A Notice of Demand will be issued to contractors who fail to pay the levy within the liability period (30 days) from the date of issuance of Form CIDB L2/96. All registration matters will be blocked when the Demand Notice is issued. In addition to the levy, the contractor will also be charged a legal fee of one hundred and fifty ringgit. The contractor must clear this payment within 21 days from the date the Notice of Claim is issued to avoid disciplinary action and court action.
- 3. Declaration of Doubtful Construction work
Contractors who make dubious declarations (project information, value of construction work, documents etc.) may be subjected to disciplinary action.
- 4. Appointment of Consultants or Appraisers
Should CIDB doubt a declaration made by the contractor, CIDB reserves the right to appoint any consultant or appraiser to assess the project. The imposition of the levy will be adjusted based on the assessment made. If the contractor is not satisfied with the assessment, a second assessment will be made by a consultant appointed by CIDB but all costs will be borne by the contractor.
- 5. Disciplinary Actions and Penalties
Contractors may be subject to disciplinary action and penalties as follows:
- i. Failure to declare construction work (Penalty up to a maximum of RM500,000.00)
- ii. Failing to Clear the Levy within the period set by CIDB
(Penalty up to a maximum of RM25,000.00 or twice the value of the levy or whichever is higher)
- iii. Doubtful Declaration
(Penalty up to a maximum of RM500,000.00)
- Contractors may be subjected to disciplinary action on registration if they still fail to pay the levy, namely:
- Contractor Registration Suspended
- Contractor Registration Withdrawn
- Contractor Registration Cancelled
- 6. Court Action
The contractor faces court action, whereby a fine of not exceeding fifty thousand ringgit or four times the value of the amount of levy to be paid or any higher penalty, will be imposed if he does not pay any levy within the period set by CIDB.
Contractor's Obligations Regarding
Work Declaration And Levi Payment
According to Section 34 (1) of Act 520 of the Malaysian Construction Industry Development Board (CIDB):
"Each contractor shall declare and submit to the Board, in the manner prescribed by the Board, any contract that has been awarded to him relating to any construction work"
Commencing 4 July 2017, all declarations of construction work must be made online through the following link http://cims.cidb.gov.my
The contractor needs to upload the Letter of Award for the related project.
If the project is eligible for levy, the Levy Imposition Notification Form (CIDB Form L2) will be generated by the system and the contractor will have to clear the levy payment within the specified liability period.
Failure to declare construction work and failure to pay the levy within the time period set by the Board is an offense under Act 520.