Corporations do not wait until the end of the financial year to pay their tax liabilities. To maintain steady revenue inflows for the public treasury, companies must operate under a provisional tax system. Corporations estimate their current-year tax liability based on historical performance and pay this amount in quarterly installments throughout the fiscal year (e.g., by the 20th day of the 4th, 6th, 9th, and 12th months).

Within a statutory window post-fiscal year-end (typically within 6 months), corporate tax managers must file a comprehensive Self-Assessment Corporate Tax Return along with audited financial statements:

[ Final Audited Annual Corporate Tax Liability ]
                        |
                        +---> Greater than installments paid? ---> Company pays the Balance Due
                        |
                        +---> Less than installments paid? -------> Company files a Tax Credit / Refund

If a company’s provisional tax estimates fall significantly short of its final audited tax liability (e.g., estimating less than 80% of the actual tax due), the revenue authority applies underestimation penalties. These penalties calculate compound interest retroactively on the unpaid quarterly balances, enforcing accurate financial forecasting and corporate compliance.