Employee Provident Fund (EPF)

According to Section 41 (1) of the EPF Act 1991, an employer must register with the EPF within seven (7) days from the date the employer becomes liable to contribute, that is as soon as an employee is hired

- An employer is defined as a person with whom an employee has a contract of service or apprenticeship with
- An employee is defined as a person who is employed under a contract of service or apprenticeship. The contract of service or apprenticeship can be written or oral, expressed or implied

Minimum age: Employment age is subject to Children and Young Persons (Employment) Act 1966.
Maximum Age: 75 years

Contribution for any given month must be paid on or before the 15^th of the month

Contribution rate shall be 11% from employee and 12% / 13% from employer
* Malaysian below 60 years old)

Payment Liable for EPF Contribution

In general, all payments which are meant to be wages are accountable in your monthly contribution amount calculation. These include:

• Salary
• Payment for unutilised annual or medical leave
• Bonus
• Allowance
• Commission
• Incentive
• Arrears of wages
• Wages for maternity leave
• Wages for study leave
• Wages for half day leave
• Other payments under services contract or otherwise

Source: http://www.kwsp.gov.my

Social Security Organisation (SOCSO)

Employer and its employees must be registered with SOCSO not later than 30 days on which the Act becomes applicable to the industry

Employers are required to pay monthly contributions for each eligible employee according to the rate specified under the Employees’ Social Security Act, 1969. These contributions are divided into two (2) types, namely:

Contributions of the First Category
- For employees who are less than 60 years of age, contributions payable by employers and employees are for the Employment Injury Scheme and the Invalidity Scheme.
- The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.
Note: All employees who have not reached the age of 60, must contribute under the First Category except for those who have attained 55 years of age and have no prior contributions before they reach 55 due to non-eligibility under the Employees’ Social Security Act, 1969.

Contributions of the Second Category
- The rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule. All employees who have reached the age of 60 must be covered under this category for the Employment Injury Scheme only.
Note: For eligible new employees who are 55 years of age, they must be covered under the Second Category.

* Contribution rates are capped at an assumed monthly salary of RM4,000.00

Contribution for any given month must be paid on or before the 15^th following of the salary month

Wages subject to SOCSO contribution:

All remuneration or wages stated below and payable to staff/ workers are subject to SOCSO contributions:

1. Salary/ Wages (Full/ Part time, Monthly/ Hourly)
2. Overtime payments
3. Commission
4. Paid leave (Annual, sick and maternity leave, rest day, public holidays)
5. Allowances
6. Service charge

Wages NOT subject to SOCSO contribution:

The following wages or remuneration payable to staff/ workers are NOT subject to SOCSO contributions:

1. Payments by employer to any pension or provident fund for employees
2. Mileage claims
3. Gratuity payment(s) for dismissal or retrenchments
4. Annual bonus

Source: http://www.perkeso,gov,my

Employment Insurance Scheme (EIS)

Employer and its employees must be registered with SOCSO not later than 30 days on which the Act becomes applicable to the industry

All employers in the private sector are required to pay monthly contributions on behalf of each employee. (Government employees, domestic workers and the self-employed are exempt)

An employee is defined as a person who is employed for wages under a contract of service or apprenticeship with an employer. The contract of service or apprenticeship may be expressed or implied and may be oral or in writing. 

All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempt. 

* Contribution rates are capped at an assumed monthly salary of RM4,000.00

Contribution for any given month must be paid on or before the 15^th following of the salary month

Contribution rate shall be 0.2% from both employee and employer

Wages subject to EIS contribution:

All remuneration or wages stated below and payable to staff/ workers are subject to EIS contributions:

1. Salary/ Wages (Full/ Part time, Monthly/ Hourly)
2. Overtime payments

Wages NOT subject to EIS contribution:

The following wages or remuneration payable to staff/ workers are NOT subject to EIS contributions:

1. Payments by employer to any pension or provident fund for employees
2. Mileage claims
3. Gratuity payment(s) for dismissal or retrenchments
4. Annual bonus

Source: http://www.perkeso.gov.my/sip/

Potongan Cukai Bulanan (PCB)

Also known as Monthly Tax Deduction (MTD) which is a system of tax recovery where employers make deductions from their employees’ remuneration every month in accordance with the MTD Schedule. This is mandatory.

Employer can register and calculate at any time before payment of salaries to employees and pay to LHDN within 15 days of the following month

Employer's responsibilities under the MTD Rules are as follows:
- Deduct the MTD from the remuneration of employee in each month or the relevant month in accordance with the Schedule of Monthly Tax Deductions or Computerised Calculation Method and pay to the Director General. 
- Make additional deductions from employee's remuneration in accordance with the direction given by the Director General under Rule 4 of MTD Rules.
- Employer shall pay to the Director General, not later than the fifteen day of every calendar month, the total amount of tax deducted or should have been deducted by him from the remuneration of employees during the preceding calendar month.
- Furnish a complete and accurate employees' information of the following in a return when submitting MTD payments/additional deductions: 
 (i) income tax number (if any);
 (ii) name as stated on identity card or passport;
 (iii) new and old identity card number/police number/army number or passport number (for foreign employee); and
(iv) MTD/additional deductions amount.

Source: http://www.hasil.gov.my/

HRDF – First Schedule of PSMB Act, 2001

Section 13(1) of the PSMB Act 2001 stipulates that every employer who is covered under the Act is required to register with PSMB within such time and manner as may be prescribed.

Employers with 10 and more local employees across all sectors under the PSMB Act 2001 must register with PSMB.

Any employer who is convicted for not registering with PSMB may be fined up to an amount not exceeding RM10,000 or face imprisonment up to a year, or both (Section 13(2)).

According to the First Schedule of PSMB Act, 2001, definitions of industries covered are as follows:

HRDF – First Schedule of PSMB Act, 2001

Source:

http://www.hrdf.com.my/wps/portal/PSMB/MainEN/Corporate-Profile/PSMB-Act/

What is Form E?

Form E (Borang E) is required to be submitted by every employer (company/enterprise/partnership) to LHDN (Inland Revenue Board, IRB) every year not later than 31 March.

Who Needs to File Form E?

All companies. LHDN: “Every employer shall, for each year, furnish to the Director General a return in the prescribed form…”

Due Date for Submission of Form E

• Subsection 83(1) of ITA 1967 stipulates that the form must be furnished by every employer before or on 31 March. Form E will only be considered complete if C.P. 8D is furnished before or on the due date for submission of the form.

Grace Period for Submission of Form E for The Year of Remuneration 

* Employers which are companies are compulsorily required to furnish Form E via e-Filing (Form e-E) with effect from the Year of Remuneration 2016.

• Form E furnished via e-Filing / postal delivery after the due date for its submission shall be deemed to be received within the stipulated period if it is received before or on 30 April (e-Filing) / within 3 working days (postal delivery).

• Failure to furnish within the allowable period will result in the imposition of compound under paragraph 120(1)(b) of the Income Tax Act 1967 (ITA 1967) based on the due date for submission of the form.

Form C.P. 8A / C.P. 8C (EA / EC) to be Rendered to Employees

• Pursuant to the provision under subsection 83(1A) of ITA 1967, employers are required to prepare Form C.P. 8A / C.P. 8C (EA / EC) for the year ended and render the completed form to all their employees before or on 28 February.

FORM E will only be Considered complete if C.P.8D is Furnished

C.P. 8D Format – Method of Submission by Employers for The Year of Remuneration

Employers are required to furnish C.P. 8D format to LHDNM via any of the methods stated below:

DORMANT Companies must file FORM E

Companies which are dormant and/or have not commenced business are required to furnish the Form E with effect from year of assessment 2014.

E-Filing System Opens on 1 March

The e-Filing system for submission of Form E for the year of Remuneration will be opened beginning 1 March.

Penalties up to RM20,000 or 6 Months Imprisonment

Please be advised that it is the employer’s responsibility to complete the form E and return it promptly to the Inland Revenue Board.

Penalties ranging from RM200 to RM20,000 or to imprisonment for a term not exceeding 6 months or both will be imposed if you fail to comply with the stipulated filing date.

Prefill of Remuneration Particulars In e-Filing

To facilitate taxpayers’ use of e-Filing in line with current technological development, LHDNM is further reinforcing its e-Filing system by obtaining remuneration particulars of taxpayers from their employers for prefill in their respective e-Filing forms. Prior to signing and sending the forms electronically, taxpayers using e-Filing may alter the prefilled particulars if there’s a change.

Employers are encouraged to furnish the particulars online using e-Data Praisi which can be accessed via the LHDNM Official Portal before or on 22 February. The format for Information_Layout for Prefill can be obtained from the LHDNM Official Portal. To ensure compliance with the required format, format check can be done via e-Data Praisi. Particulars furnished are acceptable as C.P. 8D particulars for Form E. Employers who have submitted information via e-Data Praisi need not complete and furnish Form C.P. 8D. Enquiries can be e-mailed to This email address is being protected from spambots. You need JavaScript enabled to view it..

Source:

http://lampiran1.hasil.gov.my/pdf/pdfam/ProgramMemfailBNCP_2017_2.pdf

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