The Malaysian tax year is the same as the calendar year – January 1st through December 31st. Employer’s tax obligations such as filing of Form E and preparation of employee’s Form EA would be at the most important task during the first quarter every year. As the deadline for the filing is coming up by end of the first quarter and if you are new to filing taxes for your company, here is a guide on Malaysia year-end tax to help you move through the tax processing with ease.
From our past experiences, here are a three simple tips to make sure you are ready for tax processing.
Update employee’s address and details
You do not want to run into error when submitting the tax file to the tax board because of missing employee’s address and details. These data is mandatory for tax filing. Clean up and update all the employee’s data in the payroll system. If your payroll system has a bulk file upload function, you can use it mass update your employees’ data.
Be familiar with the types of tax forms
What are the tax forms that a Malaysian employer need to prepare for tax season? Here are the tax forms and what they are used for.
EA Form This form is generated annually by the employer and submitted to the Inland Revenue Board (IRB)/ (LHDNM) for taxation purposes. The employee is able to check his or her tax details and print it for reference purposes.
Due date for employer: End of February of the following calendar year.
Due date for employee: Normally the end date of April of the following calendar year for employee, but sometimes LHDNM will announce latest date to extend the period for submission in online e-filling.
PCB 2(II) This form is generated annually by the employer and distributed to each employee displaying their monthly tax deductions showing the date of deduction and its receipt number.
Form E and CP8D This form is generated annually by the employer summarized all employees total yearly salary and any payitems submitted to the Inland Revenue Board (IRB)/ (LHDNM) for taxation purposes.
You will need to following information to fill up the Form E:
Employer’s (company’s) details
Employees remuneration information(i.e. salaries, wages, allowance, incentives & etc.) to be included in the CP8D form.
Be it contracted employees or part timers counted, they are required to be reported in Form E because they are considered as employees of the company.
Currently, companies that have e-filling account can upload the details of employees’ yearly income by E-Data Praisi. Due date: Before 31 March of the following calendar year.
Keep in mind the responsibilities as an employer
Take note that it is an offence for non-compliance on the below. Failure to prepare and render EA Form to employees before last day of February will be fined RM200 – RM20,000 or imprisonment for a term not exceeding 6 months or both. For further queries related to tax responsibility, please reach out to the tax officers directly.
Register employer file number
Submit employer return form (Form E)
Declare new employees
Issue income statement employees (EA/EC)
Update employees new detail and addresses
Deduct & remit MTD every month
Declare employees caseation and death during the services to LHDNM
Holds employee payments until the Tax Clearance letter is issued
Notify employees to submit TP1 form (claim of deduction/rebate for individual) and TP3 form (previous employment information in current year)
Keep documents for 7 years
Managing payroll while keeping compliant with Malaysian statutory regulations can be challenging. But you don’t have to go it alone. You can reach out to us and speak to our consultant to learn more on our payroll solutions and other time-saving tools you need to grow your business.