Malaysia Payroll Compliance Map

Malaysia Payroll Compliance Map

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Email: kul4ww@evershinecpa.com
or
Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
Skype ID: vivianyeeql;Wechat ID: vivianyeeql

WWT – Malaysia Payroll Income Tax Deduction

WWT-MY-01 WWT Tax Entity

Question from client:
Is the Malaysia salary income tax levied in federal or states? Or both federal and states?
Are the federal and states personal income tax that levied separately? Or levied together?
What is the standard withholding tax rate?

Answer from Evershine RD:
The federal government generally enacts laws relating to income tax.
Refer the below for monthly tax deduction (MTD) calculation: http://calcpcb.hasil.gov.my/index.php?&lang=eng

Individual Income Tax Rate (Year of Assessment 2021):

Chargeable Income (RM) Calculations Tax Rate Tax Amount (RM)
0 5,000 On the First 5,000 0% 0
5,001 20,000 On the First 5,000
Next 15,000		 1% 0
150
20,001 35,000 On the First 20,000
Next 15,000		 3% 150
450
35,001 50,000 On the First 35,000
Next 15,000		 8% 600
1,200
50,001 70,000 On the First 50,000
Next 20,000		 13% 1,800
2,600
70,001 100,000 On the First 70,000
Next 30,000		 21% 4,400
6,300
100,001 250,000 On the First 100,000
Next 150,000		 24% 10,700
36,000
250,001 400,000 On the First 250,000
Next 150,000		 24.5% 46,700
36,750
400,001 600,000 On the First 400,000
Next 200,000		 25% 83,450
50,000
600,001 1,000,000 On the First 600,000
Next 400,000		 26% 133,450
104,000
1,000,001 2,000,000 On the First 1,000,000
Next 1,000,000		 28% 237,450
280,000
2,000,001 and above On the First 2,000,000
Next ringgit		 30% 517,450
…….

WWT-MY-02 Registration

Question from client:
The Malaysia salary income tax collection is under the jurisdiction of which government unit?
The registration of the Malaysia salary income tax collection status, that is, the application procedure for the employer withholding certificate number, paper certificate number application, or online account application? Website? Employer withholding certificate
What is the advance certificate number?
Do you need to use the industrial and commercial certificate e-card to apply?

Answer from Evershine RD:
The income tax laws in Malaysia are administered and regulated by the Inland Revenue Board of Malaysia (IBRM) (Lembaga Hasil Dalam Negeri Malaysia).
All employers must register with IRBM and receive an income tax reference number.
This can be done at any IRBM branch or online via the e-Daftar program.
Refer to the link below for registration: – http://edaftar.hasil.gov.my/indexBI.php
Additionally, employers must register new employees at the nearest IRBM branch within 30 days of the new employees’ hire dates. This is done by filing Form CP22.

WWT-MY-03 WWT Order (OD)

Question from client:
What is the order of Malaysia salary income tax withholding declaration (information flow determines tax base) and payment (fund flow)?
Pay first and then declare?
Report first and then pays?
At the same time as the declaration and payment?

Answer from Evershine RD:
Deposit First (DF): Make monthly payments then file the required forms.

WWT-MY-04 Mechanism of Filing (MOF)

Question from client:
Malaysia salary income tax withholding declaration (information flow determines the tax base)
What is the method of account return?
Reporting cycle: every month? Every bimonthly? Every season? every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
For each month, employers must file a monthly return, Form CP39, and remit income tax withheld from payments during that month by the 15th day of the following month.
Employers must file Forms CP39 or CP39A electronically and make payments electronically through a financial institution or online via the e-CP39 program. https://ekls.hasil.gov.my/

In addition, employers must file two annual returns, Form CP8D and Form E, which summarize the yearly income tax withholding for all employees from the previous year, with IRBM by 31 March of every year.
Form E can only be filed electronically. Employers also must annually present each employee with Form EA, also known as Form CP8A, a statement of the employee’s wages earned, and tax withheld in the previous year, by the last day of February.

WWT-MY-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for the Malaysia salary income tax withholding payment (funding flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
For each month, employers must file a monthly return, Form CP39, and remit income tax withheld from payments during that month by the 15th day of the following month.
Employers must file Forms CP39 or CP39A electronically and make payments electronically through a financial institution or online via the e-CP39 program.

BNF – Deduction of Employee Social Welfare

BNF-MY-01 BNF Entity

Question from client:
Malaysia’s social insurance, medical insurance, pensions, and another employee social welfare levy, is it federal?
Is it states?Or is there a federal plus states?
If there is a federal and states, are they levied separately? or levied together?
What is the withholding tax rate?

Answer from Evershine RD:

Social Security is only imposed at federal level.

No. Types of Social Security Employee Employer
1 Employees Provident Fund (EPF) 9% 12%/13%
2 Social Security (SOCSO) 0.5% 1.75%
3 Employment Insurance System (EIS) 0.2% 0.2%
4 Human Resource Development Fund (HRDF) – 0.5%/1%

BNF-MY-02 Registration

Question from client:
Social Security Certificate Number? What is the name of the government agency in charge of social insurance?
Medical insurance certificate number? What is the name of the government agency in charge of medical insurance?
Pension certificate number? The name of the government agency in charge of pensions?
How to apply for the social welfare certificate number for employees in the country?
Paper certificate number application? Or online account application? Website?
Need to use the industrial and commercial certificate electronic card to apply?
Are the above three certificate numbers unified or separate?

Answer from Evershine RD:

No. Government Agency Types of Social Security
1 Kumpulan Wang Simpanan Pekerja (KWSP) Employees Provident Fund (EPF)
2
 		 Pertubuhan Keselamatan Sosial (PERKESO) Social Security Organization (SOCSO)
Employment Insurance System (EIS)
3 Human Resource Development Corporation Human Resource Development Fund (HRDF)

Employers must register themselves and all employees with SOCSO and the EPF.
To register with SOCSO, employers must file an Employer Registration Form (Borang 1) within 30 days of beginning operations.
To register employees, employers must file a Workers Registration Form (Borang 2) with SOCSO.
To register with EPF, employers must file EPF Form 1 (KWSP 1) within seven days from the date an employer first hires an employee.
Upon registering, employers will receive an Employer’s Reference Number, the forms needed to make monthly contributions, the forms necessary to register employees, nomination forms, an Employer’s Registration Certificate (which must be displayed at the employer’s premises), an employer’s guide and contributions tables.
To register with the EPF, employees must file form EPF Form 3 (KWSP 3) before the due date of their initial contributions to EPF.
EPF registrations can be submitted through an i-Akaun account https://www.kwsp.gov.my/ms/ilogin/login-member.
The i-Akaun portal for employers and the i-Akaun portal for employees are available from the EPF.
HRDF – Employers can register online by fill up Form 1 together with supporting documents.

BNF-MY-03 BNF Order (OD)

Question from client:
What is the order of the withholding declaration of social welfare for Malaysian employees (information flow determines the tax base) and payment (fund flow)?
Pay first and then declare? Report first and then pay?
At the same time as the declaration and payment?

Answer from Evershine RD:
Same Period: Report and pay at the same time.

BNF-MY-04 Mechanism of Filing (MOF)

Question from client:
What is the method of reporting for withholding of social benefits for Malaysia employees (information flow determines the tax base)?
Reporting cycle: every month? Every bimonthly? Every season? Every half year? Per year?
Electronic filing? Manual filing? Electronic filing and manual filing coexist?
If electronic filing is possible: Web site URL?

Answer from Evershine RD:
SOCSO and EIS payments should be made at approved commercial banks, post offices, or SOCSO offices and returns should be filed using Form 8A.
SOCSO and EIS payments and returns are due by the last day of month following the month in which salary was paid.
If no taxes are due in a particular month, employers generally should file returns, nonetheless.
EPF contribution payments are due by the 15th day of the month following the month when the employment income was paid upon which the EPF contributions were assessed.
Payment can be made by cash, postal order, money order, check, banker’s check, or internet banking and must be sent to any EPF branch.
Employers should file form KWSP 6 (Borang A) along with their payments.
Employers that must use the i-Akaun online account to file EPF contribution data also can use the online account for paying EPF contributions.
Employer contributions based on wages paid to nonresident employees to fund the workers’ compensation Employment Injury Scheme must be submitted through the Social Security Organization’s ASSIST portal.
HRDF – Login to the e-TRiS system through HRDF Portal, once the payment made, it would be deemed as submission completed.

BNF-MY-05 Mechanism of Payment (MOP)

Question from client:
What is the funding method for Malaysia employee social welfare withholding contributions (funds flow)?
Payment cycle: M per month? B every bimonthly? Q every season? H every six months? A every year?
Automatically authorize the deduction of ACH (that is, take the initiative of the recipient)?
Electronic remittance to EFT (that is, the payer takes the initiative)?
Bank counter payment OCT?
Or the above methods coexist?

Answer from Evershine RD:
SOCSO and EIS payments should be made at approved commercial banks, post offices, or SOCSO offices.
SOCSO and EIS payments and returns are due by the last day of the month following the month in which salary was paid.
EPF contribution payments are due by the 15th day of the month following the month when the employment income was paid upon which the EPF contributions were assessed.
Payment can be made by cash, postal order, money order, check, banker’s check, or internet banking and must be sent to any EPF branch.
Employers should file form KWSP 6 along with their payments.
Employers that must use the i-Akaun online account to file EPF contribution data also can use the online account for paying EPF contributions.
HRDF – Login to the e-TRiS system through HRDF Portal, choose Form 2 E-Slip, and choose payment for Levy.
Online payment can made via banks such as Public Bank, RHB or FPX.

Please be aware of below Warning:
The above contents are digested by Evershine R&D and Education Center in October 2021.
Regulations might be changed as time goes forward and different scenarios will adopt different options.
Before choosing options, please contact us or consult with your trusted professionals in this area.

Contact Us

Kuala Lumpur Evershine BPO Service Limited Corp.
E-mail: kul4ww@evershinecpa.com
or
Contact us by WeChat or Skype in the day-work-time of Malaysia  (GMT+8)
The Engaging Manager from Headquarter
Vivian Yee, ACCA, C.A. (M)
Skype ID: vivianyeeql;Wechat ID: vivianyeeql

For  how to exchange data files between your Finance Accounting System and Evershine Cloud Accounting Information System,
please send an email to HQ4kul@evershinecpa.com
Dale Chen, Principal Partner/CPA in Taiwan+Vietnam+UK will be accountable for your case.
Email address:dalechen@evershinecpa.com
linkedin address:Dale Chen

Additional Information

Evershine CPAs Firm Headquarters
6th Floor 378 Chang Chun Rd., Taipei City, Taiwan ROC
Partner Kerry Chen,  USA Graduate School and a well-English speaker
Tel No.: +886-2-27170515 ext. 105
Mobile: +886-939357000
Email: kerrychen@evershinecpa.com
Skype: oklahomekerry

Evershine has 100% affiliates in the following cities:
Headquarter, Taipei, Xiamen, Beijing, Shanghai, Shanghai,
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Evershine CPAs Firm is a LEA member headquartered in Chicago, USA, it has 600 member offices worldwide and employs approximately 28,000 people.
Besides, Evershine is Taiwan local Partner of ADP Streamline ®.
(version: 2024/07)
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