A. Update
Pursuant to the Finance Bill 2024 proposed on October 18, 2024, the Inland Revenue Board of Malaysia has made amendments to the specifications for Monthly Tax Deduction (MTD) calculations for 2025.
1. The following changes proposed in the tax budget, have been incorporated in the MTD calculations specifications:
Expansion of scope of Tax Relief on Medical Treatment Expenses for Self, Spouse and Child It has been proposed to increase the relief on assessment and diagnosis, early intervention program, and continuous rehabilitation treatment for children aged below 18 years with learning disability such as autism, ADHD, GDD, intellectual disability, down syndrome, and specific learning disabilities, from RM4,000 to RM6,000.
Further, the relief for full medical check-up, mental health check-up or consultation, and COVID-19 detection test limited to RM1,000, be expanded as follows:
- Purchase of self-testing medical devices such as glucometer, pulse oximeter, blood pressure monitor, and thermometer; and
- Fees for disease detection examination conducted at clinic or hospital, such as blood test, ultrasound, mammogram, and pap smear.
b. Expansion of scope of Tax Relief for Medical Treatment, Special Needs, and Carer Expenses for Parents
It has been proposed that the expenses for full medical check-ups for parents, currently limited to RM1,000, be expanded to include vaccinations. Additionally, expenses related to medical treatment, special needs, and parental care will be extended to cover grandparents. Full medical examination is expanded to include vaccination expenses
c. Expansion of Scope of Tax Relief on Sports Equipment and Activities
It is proposed that the tax relief of up to RM1,000 for expenses on sports equipment and activities for individuals, spouse, and children be extended to include parents.
d. Extension of Individual Income Tax Relief for Nursery or Kindergarten Fees
To continue supporting parents in accessing childcare and early education services for their children, it is proposed that the individual income tax relief of up to RM3,000 be extended for an additional three years from 2025 until 2027.
e. Extension of Tax Relief on Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)
To further promote savings by parents for their children’s tertiary education and to provide more targeted tax relief, it is proposed that the individual income tax relief of up to RM8,000 on net annual savings in SSPN be extended for three years from YA 2025 to YA 2027
f. Expansion of Tax Relief on Contribution to Private Retirement Schemes and Deferred Annuities
It has been proposed that the individual income tax relief of up to RM3,000 on contributions to PRS and premiums paid for deferred annuities be extended for a period of 5 years from YA 2026 to YA 2030.
g. Increase in Tax Relief on Education and Medical Insurance
To promote savings for children's education and enhance access to medical services, it has been proposed that the individual income tax relief on premiums paid for education and medical insurance be increased from RM3,000 to RM4,000.
h. Expansion of Scope of Tax Relief on expenses for Electric Vehicle (EV) Charging Facilities
It has been proposed that the tax relief for expenses on electric vehicle charging equipment, currently limited to RM2,500, be expanded to cover the purchase of food waste composting machines for household use. This relief can be claimed once within a three-year assessment period for the purchase of a food waste composting machine.
i. Reintroduce Tax Relief on Housing Loan Interest Payment for First Residential Home
To promote homeownership and increase disposable income, it is proposed to reinstate tax relief on interest payments for loans on the first residential home (whether individually or jointly owned), as outlined below:
| No. | House Price | Total Tax Relief Per Year |
|---|---|---|
| 1 | Up to RM500,000 | RM7,000 |
| 2 | Above RM500,000 up to RM750,000 | RM5,000 |
- The tax relief on interest payments is subject to the following conditions:
- The residential home must not be used to generate any income.
- The sales and purchase agreement must be signed between 1 January 2025 and 31 December 2027.
- The tax relief on allowable interest payments applies for three consecutive years of assessment, starting from the first year the housing loan interest is paid.
- If two or more individuals share ownership, they can claim tax relief on the housing loan interest based on the apportionment of the interest payment.
j. Increase in Income Tax Relief for Disabled Individual
It has been proposed to increase the tax relief provided for the disabled as follows:
- Tax relief for the disabled individual taxpayer is to be increased from RM6,000 to RM7,000;
- Tax relief for the individual taxpayer with a disabled spouse is to be increased from RM5,000 to RM6,000; and
- Tax relief for the individual taxpayer with unmarried disabled children is to be increased from RM6,000 to RM8,000.
2. There is no amendment in the MTD formula, however, based on the proposed changes as mentioned above, The TP1 and TP3 Forms got updated accordingly.
B. Statutory Compliance Release Date: December 05, 2024
C. Effective Date: January 01, 2025
A. Update
Prime Minister YAB Dato’ Seri Anwar Ibrahim unveiled the Budget for the Year of Assessment 2025 (YA 2025) on October 18, 2024, themed as “Membugar Ekonomi, Menjana Perubahan, Mensejahtera Rakyat" (Reinvigorating the Economy, Driving Reforms, and Prospering the People). The proposals have now been tabled before the Parliament for approval and will be officially gazetted once passed. The salient budget proposals impacting payroll are as follows:
1. Expansion of Scope of Tax Relief on Medical Treatment Expenses for Self, Spouse and Child
It has been proposed to increase the relief on assessment and diagnosis, early intervention programme and continuous rehabilitation treatment for children aged below 18 years with learning disability such as autism, ADHD, GDD, intellectual disability, down syndrome and specific learning disabilities, from RM4,000 to RM6,000.
Further, the relief for full medical check-up, mental health check-up or consultation and COVID-19 detection test limited to RM1,000, be expanded as follows:
- Full medical check-up, mental health check-up or consultation;
- Purchase of self-test kit, such as COVID-19 and influenza test kit;
- Purchase of self-testing medical devices such as glucometer, pulse oximeter, blood pressure monitor, and thermometer; and
- Fees for disease detection examination conducted at clinic or hospital, such as blood test, ultrasound, mammogram and pap smear.
2. Increase in Income Tax Relief for Disabled Individual
It has been proposed to increase the tax relief provided for the disabled as follows:
- Tax relief for the disabled individual taxpayer is to be increased from RM6,000 to RM7,000;
- Tax relief for the individual taxpayer with a disabled spouse is to be increased from RM5,000 to RM6,000; and
- Tax relief for the individual taxpayer with unmarried disabled children is to be increased from RM6,000 to RM8,000.
3. Expansion of Scope of Tax Relief on Sports Equipment and Activities
It is proposed that the tax relief of up to RM1,000 for expenses on sports equipment and activities for individuals, spouse, and children be extended to include parents.
4. Expansion of Scope of Tax Relief on Medical Treatment, Special Needs, or Carer Expenses for Parents
It is proposed that the expenses for full medical check-ups for parents, currently limited to RM1,000, be expanded to include vaccinations. Additionally, expenses related to medical treatment, special needs, and parental care will be extended to cover grandparents as follows:
- Medical treatment at clinics and hospitals;
- Treatment and homecare nursing, day care centres and residential care centres;
- Dental treatment, excluding cosmetic dental procedures; and
- Comprehensive medical check-ups and vaccinations, capped at RM1,000.
5. Extension of Tax-Exempt Allowances and Tax Deductions for Child Care
The income tax exemption of up to RM3,000 per year, currently provided for childcare allowances received by employees or paid directly by employers to childcare centers, will be expanded to include elderly care for parents and grandparents. Additionally, the tax deductions on childcare allowances provided by employers to employees will also be extended to include elderly care for parents and grandparents.
6. Expansion of Tax Relief on Contribution to Private Retirement Schemes and Deferred Annuitie
To further encourage people to save in retirement funds, it has been proposed that the individual income tax relief of up to RM3,000 on contributions to PRS and premiums paid for deferred annuities be extended for a period of 5 years from YA 2026 to YA 2030.
7. Increase in Tax Relief on Education and Medical Insurance
To promote savings for children's education and enhance access to medical services, it has been proposed that the individual income tax relief on premiums paid for education and medical insurance be increased from RM3,000 to RM4,000.
8. Extension of Tax Relief on Net Deposit in Skim Simpanan Pendidikan Nasional (SSPN)
To further promote savings by parents for their children’s tertiary education and to provide more targeted tax relief, it is proposed that the individual income tax relief of up to RM8,000 on net annual savings in SSPN be extended for three years from YA 2025 to YA 2027, subject to the following additional conditions:
- The tax relief can be claimed by either parent, with the maximum claim capped at RM8,000 for SSPN savings; and
- Withdrawals from the SSPN fund used to cover education expenses for further studies will not be included in the calculation of net savings for that particular year and will not impact the eligible amount for tax relief
9. Reintroduce Tax Relief on Housing Loan Interest Payment for First Residential Home
To promote homeownership and increase disposable income, it is proposed to reinstate tax relief on interest payments for loans on the first residential home (whether individually or jointly owned), as outlined below:
| No. | House Price | Total Tax Relief Per Year |
|---|---|---|
| 1 | Up to RM500,000 | RM7,000 |
| 2 | Above RM500,000 up to RM750,000 | RM5,000 |
The tax relief on interest payments is subject to the following conditions:
- The residential home must not be used to generate any income.
- The sales and purchase agreement must be signed between 1 January 2025 and 31 December 2027.
- The tax relief on allowable interest payments applies for three consecutive years of assessment, starting from the first year the housing loan interest is paid.
- If two or more individuals share ownership, they can claim tax relief on the housing loan interest based on the apportionment of the interest payment.
10. Extension of Individual Income Tax Relief for Nursery or Kindergarten Fees
To continue supporting parents in accessing childcare and early education services for their children, it is proposed that the individual income tax relief of up to RM3,000 be extended for an additional three years from 2025 until 2027.
11. Expansion of Scope of Tax Relief on expenses for Electric Vehicle (EV) Charging Facilities
It has been proposed that the tax relief for expenses on electric vehicle charging equipment, currently limited to RM2,500, be expanded to cover the purchase of food waste composting machines for household use. This relief can be claimed once within a three-year assessment period for the purchase of a food waste composting machine.
12. Introduction of mandatory EPF contributions for non-citizen workers
It is proposed that EPF contributions will become mandatory for all non-citizen employees working in Malaysia, with the rollout occurring in phases.
B. Statutory Compliance Release Date: October 18, 2024
C. Effective Date: YA 2025
A. Update
In line with the 2024 Budget proposal to raise the monthly salary ceiling for Perkeso contributions from RM5,000 to RM6,000, amendments have been made to the Employees’ Social Security (Amendment) Act 2024 and the Employment Insurance System (Amendment) Act 2024.
Effective from October 1, 2024, employees earning more than RM6,000 per month will have their contributions capped at the new wage ceiling of RM6,000. The contribution rate tables have been updated accordingly to reflect this change.
B. Statutory Compliance Release Date: September 30, 2024
C. Effective Date: October 01, 2024
A. Update
To facilitate the transformation and digitization of tax services, the Malaysian Inland Revenue Board (IRBM)/LHDN is steadily introducing electronic services (e-Services) via the MyTax Portal.
In line with the mandated e-services, IRBM has added a new feature to the MyTax interface that allows for the bulk upload of e-CP22 submissions for new employees to HASIL via text file. Employers are encouraged to use the e-CP22 though it is not yet compulsory.
Currently, only those holding the position of "Employer", or "Representative of Employer" are able to access this function through the interface.
B. Statutory Compliance Release Date: July 2024
C. Effective Date: July 01, 2024
Layout_eCP22.pdf
A. Update
In furtherance to the announcement made by Human Resources Minister Steven Sim in May 2024, the Social Security Organization (SOCSO) has issued Circular No. 2 of 2024, dated July 01, 2024, providing that foreign workers will be mandatorily covered under the Invalidity Scheme of SOCSO. Accordingly, below will be the contribution rates applicable:
| Monthly contribution rate | Contributor | Contribution rate for employment injury scheme | Contribution rate for invalidity scheme |
| Employer | 1.25% | 0.50% | |
| Foreign employee | - | 0.50% |
Please note that employers and foreign workers are required to make contributions based on the Contribution Rate (Appendix 1 - Third Schedule).
B. Statutory Release Date: July 01, 2024
C. Effective Date: July 01, 2024
A. Update
To facilitate the transformation and digitization of tax services, the Malaysian Inland Revenue Board (HASiL) is steadily introducing electronic services (e-Services) via the MyTax Portal.
In line with the mandated e-services of CP forms, starting from the financial year 2024, HASiL assessing officers are requesting that employers submit Forms M and BE, obtained from the employees leaving the organization, as supporting documents.
HASiL has not provided any guidelines suggesting that the employer or payroll provider is responsible for completing Forms M and BE.
B. Statutory Release Date: January 01, 2024
C. Effective Date: January 01, 2024
A. Update
The Malaysia Tax Authority (LHDN) has released the latest formats of Forms E, EA, and C.P.8D for the tax year 2023 with corresponding explanatory notes. It should be noted that starting from the Year of Remuneration 2023, all the categories of employers are required to electronically submit Form E (e-E) and C.P.8D through the official website. Form E and C.P.8D should be filed on or before March 31, 2024, and Form EA should be rendered to the employees on or before February 29, 2024.
B. Statutory Compliance Release Date: January 29, 2024
C. Effective Date: January 01, 2024
A. Update
The Malaysia Tax Authority (LHDN) has released Form C.P.8D for the tax year 2023. The form contains the details of remuneration paid to employees for the year 2023 and needs to be submitted on or before February 25, 2024.
Following are the changes that are made in the form as compared to the year 2022:
- In Part A, employer’s particulars have been removed.
- Employee status and Date of Retirement / End of Contract has been inserted.
- Part B of the guidance document which contains information about the Excel format of CP8D has been removed.
B. Statutory Compliance Release Date: January 09, 2024
C. Effective Date: January 01, 2024
A. Update
Pursuant to the Finance Bill 2023 proposed on November 28, 2023, the Inland Revenue Board of Malaysia has made amendments to the specifications for Monthly Tax Deduction (MTD) calculations for 2024.
1) The following changes proposed in the tax budget, have been incorporated in the MTD calculations specifications:
- Expansion of scope of Tax Relief on Medical Treatment Expenses
It has been proposed to expand the scope of tax relief to cover dental examination and treatment expenses from dental practitioners registered with the Malaysian Dental Council, limited to RM1,000. - Expansion of scope of Tax Relief for Medical Treatment, Special Needs, and Carer Expenses for Parents
It has been proposed to extend the scope of tax relief to a full medical examination for parents, limited to RM1,000 - Restructured limit and scope of Tax Relief for Lifestyle
Proposals made are as under: - Scope be expanded to include fees for self-skills enrichment courses, whereby taxpayers are encouraged to study skills that are unrelated to the job such as the course related to hobbies, religion, or language.
- Removal of the purchase of sports equipment and gymnasium membership fees.
- Introduction of "Sports Equipment and Activities", limited to RM1,000. That would cover the purchase of sports equipment, rental or entry fees to sports facilities, registration fees for participating in sports competitions, and gymnasium membership fees and, expanded to sports training fees imposed by associations/sports clubs/companies registered with the Sports Commissioner or Companies Commission of Malaysia and carrying out sports activities as listed under the Sports Development Act 1997.
- Extension of Tax Relief for Up-Skilling and Self-Enhancement Courses Fees
It has been proposed to extend the tax relief of up to RM2,000, given for the fees paid for attending up-skilling or self-enhancement courses, to improve skills or self-advance in any skill area recognized by the Director General of Skills Development under the Act National Skills Development 2006 [Act 652], to a further 3 years from YA 2024 to YA 2026. - Extension of Tax Relief on Expenses Related to Electric Vehicles (EV)
To further support the development of the local EV industry and in line with the New Industrial Master Plan 2030, it has been proposed that the individual income tax relief on expenses related to installation, rental, and purchasing including hire-purchase equipment or subscription fees for EV charging facilities be extended for a period of 4 years from YA 2024 to YA 2027.
2. There is no amendment in the MTD formula, however, based on the proposed changes as mentioned above, The TP1 and TP3 Forms got updated accordingly.
B. Statutory Compliance Release Date: January 01, 2024
C. Effective Date: January 01, 2024
A. Update
Prime Minister Datuk Seri Anwar Ibrahim unveiled the Budget for the Year of Assessment 2024 (YA 2024) on October 13, 2023 themed as “Reformasi Ekonomi, Memperkasakan Rakyat" (Economic Reform, Empowering People). The proposals have now been tabled before the Parliament for approval and will be gazetted once approved. The salient budget proposals impacting payroll are as follows:
1. Expansion of Scope of Tax Relief on Medical Treatment Expenses
It has been proposed to expand the scope of tax relief to cover dental examination and treatment expenses from dental practitioners registered with the Malaysian Dental Council, limited to RM1,000.
2. Expansion of Scope of Tax Relief for Medical Treatment, Special Needs, and Carer Expenses for Parents
It has been proposed to extend the scope of tax relief to a full medical examination for parents, limited to RM1,000.
3. Restructured limit and Scope of Tax Relief for Lifestyle
Following changes have been proposed in the tax relief for lifestyle:
- Scope be expanded to include fees for self-skills enhancement courses, whereas the purchase of sports equipment and gymnasium membership fees be removed
- Specific tax relief be introduced for "Sports Equipment and Activities", limited to RM1,000. That would cover the purchase of sports equipment, rental or entry fees to sports facilities, registration fees for participating in sports competitions, and gymnasium membership fees and, expanded to sports training fees imposed by associations/sports clubs/companies registered with the Sports Commissioner or Companies Commission of Malaysia and carrying out sports activities as listed under the Sports Development Act 1997.
4. Extension of Tax Relief for Up-Skilling and Self-Enhancement Courses Fees
It has been proposed to extend the tax relief of up to RM2,000, given for the fees paid for attending up-skilling or self-enhancement courses, to further 3 years from YA 2024 to YA 2026.
5. Extension of Tax Relief on Expenses Related to Electric Vehicles (EV)
To further support the development of the local EV industry and in line with the New Industrial Master Plan 2030, it has been proposed that the individual income tax relief on expenses related to installation, rental, and purchasing including hire-purchase equipment or subscription fees for EV charging facilities be extended for a period of 4 years from YA 2024 to YA 2027.
6. Increase in Income Tax Exemption for Childcare Allowance under Perquisites from Employment
It has been proposed to increase the annual Income tax exemption for childcare allowances, provided by employers or directly paid to childcare centres, from RM2,400 to RM3,000.
7. Enhancement in Tax Incentive for Women Career Comeback Programme
It has been proposed to extend the tax incentive for women returning to work after a career break of at least 2 years for 4 more years from YA 2025 to YA 2028. For the extended incentive, the applications must be received by the Talent Corporation Malaysia Berhad by December 31, 2027.
8. Revision of Tax Incentive for Returning Experts Programme (REP)
To encourage global talent circulation and attract the Malaysian diaspora professionals to return, it has been proposed to consider the income tax at a fixed rate of 15% on employment income received by an individual for 5 consecutive years of assessment for applications received by the Talent Corporation Malaysia Berhad by December 31, 2027
9. Increase in ceiling limit for SOCSO
It has been proposed to increase the monthly salary ceiling limit for SOCSO contributions from RM5,000 to RM6,000.
B. Statutory Compliance Release Date: October 13, 2023
C. Effective Date: YA 2024 (YA 2025 for point no. 7 above)
A. Update
With the aim of system transformation and digitization of the tax service, the Inland Revenue Board of Malaysia (HASiL) will progressively mandate the use of electronic services (e-Services) for services accessible through the MyTax Portal starting from September 01, 2023.
To facilitate a smooth transition, HASiL’s customer service officers will be available at the HASiL Service Counter to aid taxpayers and employers with taxation matters and will also assist in preparing them to fully utilize the e-Services effectively by January 01, 2024.
Below is the list of mandatory e-Services, related to payroll, that will be gradually implemented, starting from September 01, 2023. As of now, both e-filing and physical submission can be done:
- Application for verification and registration of Tax Identification Number (TIN) (e-Daftar) application of PIN No.
- Updating Information via:
- e-Kemaskini (for Individual Profile),
- e-Kemaskini (for Company Profile),
- Advance Payment via:
- e-PCB - For employers without a computerized payroll system for Monthly Tax Deduction (MTD)
- e-CP39 - For employers without a computerized payroll system considering only mandatory deductions for MTD
- e-Data PCB - For employers with a computerized payroll system for MTD
- Submission of Return Forms, Taxation Documents & Instruments
- e-Filing (e-Form & e-Acknowledge Receipt) - For taxpayers to complete and submit the Income Tax Return Form (ITRF) online. Please note that e-Filing has already been made mandatory for corporate employers starting from the Year of Assessment 2016
- e-Data Praisi / e-CP8D – For employers to submit their employees' remuneration information online
- Application & Appeal (CP22A, CP21)
- e-Residence - For taxpayers to apply for a Residence Status Certificate (STM) to claim the benefits of the Double Taxation Avoidance Agreement (DTA)
- e-SPC (Individual) - For employers to apply for a Tax Clearance Letter (SPC) via Form CP22A, CP22B, or CP21
e-Services that are still optional (encouraged)
- e-CP22 - For employers to submit notification form for new employee
B. Statutory Compliance Release Date: August 21, 2023
C. Effective Date: September 01, 2023
A. Update
Inland Revenue Board of Malaysia has released the Amendment to specifications for Monthly Tax Deduction (MTD) calculations for the year 2023 based on the changes in the Finance Act 2023 gazetted on May 31, 2023.
1. The following optional deductions have been removed and cannot be claimed by the employees from the Year 2023:
| S.No | Optional Deduction | Amount (RM) |
|---|---|---|
| I | Additional deduction on purchase of personal computer, smartphone and tablet during the period 1/1/2021 to 31/12/2022 | 2,500 |
| II | Deduction on domestic tourism expenditure | 1,000 |
2. The Changes proposed in the Tax budget dated February 24,2023 have got incorporated in the specifications for MTD calculations and further following changes have also been added:
a. The Tax relief of RM8,000 on the amount deposited in Skim Simpanan Pendidikan Nasional (SSPN) by an individual taxpayer for his/her children’s education is extended until the year of assessment 2024.
b. To encourage high value employees to work at Malaysia, a flat tax rate of 15% is given to employees who are non-individual citizens resides in Malaysia and holds the position of C-suites in companies that have approved the placement incentive scheme manufacturing operations back to Malaysia.
3. Form TP1 and Form TP3 have also been amended after incorporating the changes mentioned above.
B. Statutory Compliance Release Date: June 7, 2023
C. Effective Date: January 1, 2023
Final MTD 2023.pdf
A. Update
Prime Minister Datuk Seri Anwar Ibrahim unveiled the revised Budget for 2023 on February 24, 2023, themed "Membangun Malaysia Madani (Developing Malaysia Madani)". The proposals have now been tabled before the Parliament for approval and will be gazetted once approved. The salient tax-centric proposals of Budget 2023 includes:
1. Revision of individual income tax rate:
To address high cost of living and increased disposable income in the hands of the middle-class people and to make the tax rate more progressive, the below tax rate table has been proposed.
A comparison of the current and proposed resident individual income tax rate is as follows:
| Taxable income (RM) | Current Tax Rate (%) | Proposed Tax Rate (%) |
|---|---|---|
| 0 - 5,000 | 0 | 0 |
| 5,001 - 20,000 | 1 | 1 |
| 20,001 - 35,000 | 3 | 3 |
| 35,001 - 50,000 | 8 | 6 |
| 50,001 - 70,000 | 13 | 11 |
| 70,001 - 100,000 | 21 | 19 |
| 100,001 - 250,000 | 24 | 25 |
| 250,001 - 400,000 | 24.5 | 25 |
| 400,001 - 600,000 | 25 | 26 |
| 600,001 - 1,000,000 | 26 | 28 |
| 1,000,001 - 2,000,000 | 28 | 28 |
| Over 2,000,000 | 30 | 30 |
Effective Date: From Year of Assessment (YA) 2023
2. Expansion of scope of tax relief on medical treatment expenses:
It is proposed that the scope of income tax relief on medical treatment expenses be expanded to cover the intervention expenditure for Autism, Attention Deficit Hyperactivity Disorder (ADHD), Global Developmental Delay (GDD), Intellectual Disability, Down Syndrome and Specific Learning Disabilities with the limit of RM 4,000 to ease the financial commitment on early intervention for children with learning disabilities. This relief will be allowed only if the following conditions are satisfied:
- diagnostic assessment certified by a medical practitioner registered with the Malaysian Medical Council (MMC);
- early intervention and rehabilitation programmes conducted by health profession practitioners registered under the Allied Health Profession Act 2016
With the expansion of this scope, it is proposed that the amount of tax relief for medical treatment expenditure be increased from RM8,000 to RM10,000.
Effective Date: From YA 2023
3. Expansion of scope on Tax relief on Life Insurance Premium:
Presently voluntary contribution to EPF can be claimed as tax relief along with the mandatory contribution to EPF with the limit of RM4,000. It is proposed to also include additional voluntary contribution to EPF with the tax relief on life insurance premium with the limit of RM3,000. Therefore, along with maximum tax relief of RM4,000 additional RM3,000 can also be claimed with regards to voluntary contribution to EPF. This treatment also applies to civil servants with pension schemes.
The overall limit of RM7,000 on tax relief on Life Insurance premium remains the same.
| No. | Life insurance premium | Tax exemption |
|---|---|---|
| 1 | Mandatory contributions to approved schemes or voluntary contributions to EPF (excluding private retirement schemes) or contributions under any written law | Limited to RM4,000 |
| 2 | Life insurance premium or life takaful or additional voluntary contributions to EPF or both | Limited to RM3,000 |
Effective Date: From YA 2023
4. Extension of tax relief on the payment of fee to childcare centre or kindergarten:
It is proposed to extend the tax relief of RM3,000 on payment of fee to registered childcare centre or kindergarten till year of assessment 2024.
Effective Date: Till YA 2024
B. Statutory Compliance Release Date: February 24, 2023
C. Effective Date: YA 2023 and YA 2024
Tax Measures 2023.pdf
A. Update
The Malaysia Tax Authority (LHDN) has released Form EA, Form E and Form CP8D for the year 2022. These forms contains the details of the remuneration paid to the employees for the year 2022 and needs to be submitted in 2023 before the due dates. The Due date for providing Form EA to the employees is February 28, 2023 and due date for submission of Form E and Form CP8D with the LHDN is March 31, 2023. Following are the changes that are made in the tax forms as compared to the respective forms for the year 2021.
| Form | Changes |
|---|---|
| Form EA |
|
| Form E |
|
| Form CP8D |
|
B. Statutory Compliance Release Date: January 23, 2023.
C. Effective Date: a. Form EA: January 23, 2023
b. Form E and Form CP8D: March 1, 2023
A. Update
Inland Revenue Board of Malaysia has released the initial amendment to specifications for Monthly Tax Deduction (MTD) calculations for the year 2023.
1. The following optional deductions have been removed and cannot be claimed by the employees from the Year 2023:
| S.No | Optional Deduction | Amount (RM) |
|---|---|---|
| 1 | Deduction on the amount deposited in Skim Simpanan Pendidikan Nasional (SSPN) by an Individual for his/her children’s education | 8,000 |
| 2 | Additional deduction on purchase of personal computer, smartphone and tablet during the period 1/1/2021 to 31/12/2022 | 2,500 |
| 3 | Deduction on domestic tourism expenditure | 1,000 |
2. Form TP1 and Form TP3 have also been amended to remove the line items applicable for the disclosure of the above deductions.
3. The specifications also states that until the new budget for the year 2023 is announced, there are no changes in the MTD calculations for the year 2023.
B. Statutory Compliance Release Date: January 1, 2023
C. Effective Date: January 1, 2023
Initial MTD 2023.pdf
A. Update
The Human Resource Ministry of Malaysia has amended the Malaysia Employment Act 1955 (‘the Act’), by issuing Malaysia Employment (Amendment) Act, 2022 (‘the Amendment’) which will become effective from January 1, 2023.
The following are the key changes made in the Act including the definition of the employees:
1. Employee Definition:
Earlier the First schedule of the Act defined employees as those having contract of service with employer and earning less than 2,000 ringgit per month will be constituted as employee. However, as per the Amendment, employee is defined as follows:
- All employees who have entered contract of service with the employer
- Benefit under this Act applies to all employees, except the following payments which are not applicable to employees whose wage exceeds 4,000 ringgit a month:
- Rest day pay
- Normal Overtime
- Pay for work done during public holiday. (In addition to holiday pay)
- Pay for work done when a public holiday falls on a half working day
- Termination, Lay off and retirement benefits
2. Maternity leave:
Eligible period of Maternity leave has been increased from 60 days to 98 days.
3. Paternity leave:
This is a newly introduced leave type where 7 consecutive days of paid paternity leave granted to a married male employee for each confinement subject to the following conditions:
- The Paternity leave is restricted to 5 confinements irrespective of the number of spouses.
- The Employee needs to employ under the same employer at least 12 months immediately before the commencement of such paternity leave.
- The Employee has notified the pregnancy of his spouse at least 30 days from the expected confinement or as early as possible after the birth with the employer.
4. Sick leave:
Earlier total sick leave inclusive of hospitalization was 60 days. As per the Amendment, Hospitalization sick leave is exclusive of non-hospitalization sick leave. Therefore, employee will get 60 days of hospitalization sick leave every calendar year, and moreover the regular sick leaves as given in the below table:
| Year of Service | Sick Leave | Hospitalizatio n | Earlier Entitlement | New Entitlement |
|---|---|---|---|---|
| Below 2 years | 14 days | 60 days | 60 days | 74 days |
| 2 to 5 years | 18 days | 60 days | 60 days | 78 days |
| Above 5 years | 22 days | 60 days | 60 days | 82 days |
5. Reduction of maximum working hours:
The maximum working hours for which the employee is required to work has been reduced from 48 hours to 45 hours in a week. Employee engaged in shift work may work more than 45 hours in one week, but the average number of hours worked over any period of three weeks shall not exceed 45 hours per week.
6. Apprenticeship Contract:
Under the Act, the period of apprenticeship contract shall not be less than 2 years, whereas as per the Amendment, the period of apprenticeship contract shall be for a minimum period of 6 months and a maximum period of 24 months.
7. Calculation of wages for incomplete month’s work:
A new provision has been introduced for calculation of wages for the employee who is employed on a monthly rate of pay and has not completed a whole month of service—
- where he commenced employment after the first day of the month or
- where his employment was terminated before the end of the month or
- where he took leave of absence without pay for one or more days of the month;
shall be paid wages due to him for that month calculated according to the following formula:
Monthly wages
-------------------------------X Number of days eligible in the wage period
Number of days of the
particular wage period.
8. The Other changes are part of the documents attached in the source below
B. Statutory Compliance Release Date: August 26, 2022
C. Effective Date: January 1, 2023
A. Update
Finance Minister of Malaysia, Tengku Datuk Seri Zafrul Tengku Abdul Aziz unveiled Budget for 2023 on October 07,2022, themed "Budget 2023: Malaysian Families, Prosperity Together". The proposals have now been tabled before the parliament for approval and will be gazetted once approved. The salient tax-centric proposals of Budget 2023 include:
- Revision of individual income tax rate:
To address high cost of living and increased disposable income in the hands of the middle-class people and to make the tax rate more progressive, the below tax rate table has been proposed. Depending on the slab applicable, the savings to the individuals will range from RM250 to RM1,000
A comparison of the current individual income tax rate and the proposed tax rate is as follows:
Taxable income (RM) Current Tax Rate (%) Proposed Tax Rate (%) 0 - 5,000 0 0 5,001 - 20,000 1 1 20,001 - 35,000 3 3 35,001 - 50,000 8 8 50,001 - 70,000 13 11 70,001 - 100,000 21 19 100,001 - 250,000 24 24 250,001 - 400,000 24.5 25 400,001 - 600,000 25 25 600,001 - 1,000,000 26 26 1,000,001 - 2,000,000 28 28 Over 2,000,000 30 30 Effective Date: From Year of Assessment (YA) 2023
- Expansion of scope of tax relief on medical treatment expenses:
It is proposed that the scope of income tax relief on medical treatment expenses be expanded to cover dental examination and treatment expenses from dental practitioners registered with the Malaysian Dental Council limited to RM1,000. The Overall limit of RM8,000 on tax relief on medical treatment expenses remains the same.
Effective Date: From YA 2023
- Extension of tax relief on the National Education Savings Scheme (SSPN):
It is proposed that individual income tax relief of up to RM8,000 on annual net savings in National Education Savings Scheme (SSPN) be extended for a period of 2 years. i.e., for assessment year 2023 and assessment year 2024.
Effective Date: For YA 2023 and YA 2024
- Expansion of scope on Tax relief on Life Insurance Premium:
Presently voluntary contribution to EPF can be claimed as tax relief along with the mandatory contribution to EPF with the limit of RM4,000. It is proposed to also include additional voluntary contribution to EPF with the tax relief on life insurance premium with the limit of RM3,000. Therefore, along with maximum tax relief of RM4,000 additional RM3,000 can also be claimed with regards to voluntary contribution to EPF. This treatment also applies to civil servants with pension schemes.
The overall limit of RM7,000 on tax relief on Life Insurance premium remains the same.
No. Life insurance premium Tax exemption 1 Mandatory contributions to approved schemes or voluntary contributions to EPF (excluding private retirement schemes) or contributions under any written law Limited to RM4,000 2 Life insurance premium or life takaful or additional voluntary contributions to EPF or both Limited to RM3,000 Effective Date: From YA 2023
- Extension of tax relief on the payment of fee to childcare centre or kindergarten:
It is proposed to extend the tax relief of RM3,000 on payment of fee to registered childcare centre or kindergarten till year of assessment 2024.
Effective Date: Till YA 2024
- Expansion of scope on Tax relief on Complete Medical Examination:
Presently, tax relief of RM1,000 is provided for payment made in relation to COVID detection tests. Now, it is proposed to expand the scope of COVID-19 detection tests by including the tests made in laboratories recognized by the Ministry of Health of Malaysia.
Effective Date: From YA 2023
- Revision of eligibility requirements of tax incentives for women back to work after career break:
Women, who return to work after career break of at least 2 years on the date the application received by Talent Corporation Malaysia Berhad from January 1, 2023, to December 31, 2027 are eligible for tax exemption on employment income received from assessment year 2023 to assessment year 2028.
Effective Date: From YA 2023
B. Statutory Compliance Release Date: October 07, 2022
C. Effective Date: YA 2023 and Others as provided
A. Update
The Malaysian Parliament has passed Employment Insurance System (Amendment) Act 2022 (‘the Act’) by amending the Employment Insurance System Act 2017. The maximum salary for contributing EIS has been increased from 4,000 ringgit to 5,000 ringgit.
The second schedule of the Act has been amended to provide the contribution details for salary range between 4,000 ringgit to 5,000 ringgit. For employees having salary above 5,000 ringgit, the contribution will be restricted to salary in the last bucket of the table i.e., 4900 to 5,000 ringgit.
The Act has been gazetted now. For the detailed table, please refer to the notification below.
B. Statutory Compliance Release Date: August 30, 2022
C. Effective Date: September 01, 2022
Act A1657.pdf
A. Update
The Malaysian Parliament has passed Employees Social Security (Amendment) Act 2022 (‘the Act’) by amending the Employees Social Security Act 1969. The maximum salary for contributing SOCSO has been increased from 4,000 ringgit to 5,000 ringgit.
The third schedule of the Act has been amended to provide the contribution details for salary range between 4,000 ringgit to 5,000 ringgit. For employees having salary above 5,000 ringgit, the contribution will be restricted to salary in the last bucket of the table i.e., 4900 to 5,000 ringgit.
The Act has been gazetted. For the detailed table, please refer to the notification below.
B. Statutory Compliance Release Date: July 21, 2022
C. Effective Date: September 01, 2022
Act A1658.pdf
A. Update
The Social Security Organization of Malaysia (PERKESO) has announced that the SOCSO and EIS contributions can be filed simultaneously in a single transaction through the assist portal as an additional feature in order to ease the filing process.
The previous option of filing SOCSO and EIS contributions as separate text files will also be available.
B. Statutory Compliance Release Date: July 22, 2022
C. Effective Date: July 22, 2022
https://www.perkeso.gov.my
A. Update
The EPF Authority (KWSP) has announced that the employee share of contribution rate for all the employees below 60 years of age will return to 11% from 9% starting from July 2022 salary (August 2022 contribution) onwards. The Third Schedule for the revised contribution has been released by the authority and attached in the source below.
B. Statutory Compliance Release Date: July 01, 2022
C. Effective Date: July 01, 2022
A. Update
Minimum Wage Order 2022 has been gazetted vide notification no. PU (A) 140, wherein minimum wage rate paid to the employees on monthly, daily, and hourly basis has been revised as follows:
| Minimum wage rate | ||||
| Monthly | Daily | Hourly | ||
| RM1,500 | Number of working days in a week | RM7.21 | ||
| 6 | 5 | 4 | ||
| RM57.69 | RM69.23 | RM86.54 | ||
The above minimum wage rates are applicable to for both regular and piece rated workers working in an organisation who employ 5 or more employees. For employers who employ less than 5 employees, please refer to the link below for the minimum wage rate details.
Employers with less than 5 employees and their area of work are not in city/ municipal council area are temporarily exempted until 31 December 2022.
The above exemption however does not apply to employers who carry out professional activities classified under the Malaysia Standard Classification of Occupations published by the Ministry of Human Resource, regardless of the number of employees.
B. Statutory Compliance Release Date: April 27, 2022
C. Effective Date: May 1, 2022
Minimum Wages Order 2022
A. Update
The Inland Revenue Board of Malaysia (HASiL) has announced that starting April 1, 2022, a new e-Telegraphic Transfer (e-TT) System will be introduced for the payment of Income Tax, Withholding Tax (WHT) through Telegraphic Transfer (TT), Electronic Funds Transfer (EFT) and Inter-Bank GIRO (IBG) methods from within and outside Malaysia.
With the implementation of the new e-TT system, the four types of direct tax payments i.e., Compounds, Foreign Artists Tax, WHT and RPGT withheld by the acquirer (section 21B, RPGT Act 1976) which currently can only be paid manually at HASiL Payment Counters, can also be paid online. The Procedures are part of the link provided.
B. Statutory Compliance Release Date: March 03, 2022
C. Effective Date: April 01, 2022
E-Telegraphic Transfer
A. Update
Finance Minister of Malaysia, Tengku Datuk Seri Zafrul Tengku Abdul Aziz unveiled Budget for 2022 on October 29, 2021, themed "Keluarga Malaysia, Makmur Sejahtera (A Prosperous Malaysian Family)". The proposals have now been tabled before the parliament for approval and will be gazetted once approved. The salient tax-centric proposals of Budget 2022 include:
New proposal on tax relief introduced in the Budget
1. Review of tax relief for Social Security Organisation (SOCSO) contributions:
It is proposed that the scope of tax relief for SOCSO contributions be expanded to cover employee contributions through the EIS and the tax relief limit be increased from RM 250 to RM 350
Effective Date: Year of Assessment (YA) 2022
2. Review of individual income tax relief for up-skilling and self-enhancement course fees:
It is proposed the tax relief limit be increased from up to RM 1,000 to up to RM 2,000 on fees paid for up-skilling or self-enhancement courses in any field recognised by the Department of Skills Development, Ministry of Human Resources. The above relief is available till YA 2023 only.
However, the tax relief on the total education fees will continue to be RM 7,000
Effective Date: YA 2022
3. Expansion of scope of tax relief on medical treatment expenses:
It is proposed to extend the tax relief on qualifying expenses for medical examination to expenses incurred for mental health related check-up or consultation services from:
- Psychiatrists registered with the Malaysian Medical Council under the Mental Health Act 2001 (Act 615); or
- Clinical psychologists registered with the Malaysian Allied Health Professions Council under the Allied Health Professions Act 2016 (Act 774); or
- Counsellors registered with the Board of Counselors Malaysia under the Counselors Act 1998 (Act 580).
Effective Date: YA 2022
4. Individual income tax relief in relation to the cost of installation, rental, purchase costs or subscription fees for charging facilities of Electric Vehicles (EV):
To support the development of the local EV industry, it is proposed to provide individual income tax relief up to RM 2,500 on expenses related to cost of installation, rental, purchasing including hire-purchase equipment or subscription fees for Electric Vehicles charging facilities for 2 years. EV include passenger vehicles (including SUVs and MPVs), commercial vehicles and motorcycles. The above relief is available till YA 2023 only.
Effective Date: YA 2022.
5. Income tax exemption on eligible e-sports tournament prize money:
It is proposed that the prize money from eligible e-sports tournament to be considered as exempt from income tax.
Effective Date: To be announced
6. Individual income tax relief for self-funded booster vaccination:
It is proposed to provide the tax relief to individuals on costs incurred in relation to the self-funded booster vaccination.
Effective Date:YA 2022 only
Extension of the relief / exemptions:
1. Scope of tax relief on Employees Provident Fund (EPF) contributions:
It is proposed that voluntary contributors including pensionable civil servants will also be eligible for tax relief on EPF contributions
Effective Date: YA 2022
2. Special individual income tax relief for domestic tourism expenses:
It is proposed that the income tax relief of up to RM 1,000, which was granted to resident individual taxpayers in respect of the qualifying expenses incurred for domestic travel has been extended to expenses incurred up to 31 December 2022.
Effective Date:YA 2022
3. Individual income tax relief for payments to childcare centre or kindergarten:
It is proposed that the individual income tax relief of RM 3000 for payments to childcare centre or kindergarten has been extended till YA 2023.
Effective Date: YA 2022
4. Special individual income tax relief for purchase of mobile phones, computers and tablets:
It is proposed that the special individual income tax relief of RM 2500 under Lifestyle Relief for purchase of mobile phones, computers and tablets of has been extended for another 1 year for purchases made between 1 January 2022 and 31 December 2022.
Effective Date: YA 2022
5. Individual income tax relief for premium paid for deferred annuity:
Income tax relief of up to RM 3,000 on premium payment for deferred annuity and contribution in the Private Retirement Scheme (PRS) is eligible to be claimed annually by individual taxpayers. Following the extension of the income tax relief for contribution in Private Retirement Scheme in Budget 2021, it is proposed that the income tax relief for deferred annuity premium payment be extended for 4 years i.e., till YA 2025.
Effective Date: From YA 2022
6. Special income tax rate for non-citizen individuals holding primary positions in companies that make strategic new investments:
It is proposed to extent the period of application received by the Malaysian Investment and Development Authority (MIDA) until 31 December 2022, for the incentive of flat Income tax rate of 15% given to non-residents holding key positions (C-Suite).
Effective Date: YA 2022
7. Reduction of minimum employee contribution rate to Employees Provident Fund (EPF):
The Government proposes to extend the period for the reduced minimum employee EPF contribution rate (from 11% to 9%) up to June 2022.
Effective Date: YA 2022 till June 2022.
B. Statutory Compliance Release Date: October 29, 2021
C. Effective Date: YA 2022 and Others as provided below
Budget 2022 Speech.pdf
A. Update
Further to the earlier HRD levy exemptions provided due to COVID-19 impact, HRD Corp-registered employers who could not operate during Movement Control Order (MCO) are automatically exempted from paying the mandatory Human Resource Development (HRD) Levy under the Pembangunan Sumber Manusia Berhad Act 2001, in relation to the salary paid for the month of July 2021 and August 2021. The above exemption has been provided under PAKEJ PERLINDUNGAN RAKYAT DAN PEMULIHAN EKONOMI (PEMULIH) Package.
B. Statutory Compliance Release Date: July 01, 2021
C. Effective Date: July 01, 2021
https://hrdcorp.gov.my/
A. Update
1. As a result of COVID-19, all HRD Corp-registered employers are exempted from paying the mandatory Human Resource Development (HRD) Levy under the Pembangunan Sumber Manusia Berhad Act 2001 for June 2021 (June Salary). This has been announced by Prime Minister as assistance to Movement Control Order (MCO) 3.0 namely the Empower People & Additional Economy Strategic Programme (PEMERKASA Plus).
2. As per Resource Development Order Manusia Berhad (Levy Exemption) (No. 2) 2021, the employers registered with HRD Corporation between March 1, 2021 and June 30, 2021, will be exempt to pay HRD Levy from June 1, 2021 to December 31, 2021.
Provided they fall under the list of industries specified in column (1) of the Schedule for the sector or activity specified in column (2) of PERINTAH PEMBANGUNAN SUMBER MANUSIA BERHAD (LEVI EXEMPTION) (NO. 2).
B. Statutory Compliance Release Date: May 31, 2021
C. Effective Date: June 01, 2021 till December 31, 2021
A. Update
The Government of Malaysia in budget speech stated that to help reduce the cash flow burden of companies that are still affected by the COVID-19 pandemic, an exemption from the HRDF levies will be given for 6 months effective January 01, 2021. The exemption will cover the tourism sector and companies affected by the COVID-19 crisis. This exemptions at present is at proposal stage and will be effective as and when government releases further directives.
B. Statutory Compliance Release Date: November 06, 2020
C. Effective Date: January 1, 2021
A. Update
The Malaysian Inland Revenue Board (‘MIRB’) has released the latest forms to be used by Employers for the Assessment Year 2021.
The forms are as under:
| No | Form Number | Purpose | Links |
|---|---|---|---|
|
1 |
CP21 |
Form to be used by Employer on Employee's Departure from Malaysia |
|
|
2 |
CP22 |
Form to be used by Employer when the New Employee Joins |
|
|
3 |
CP22A |
Form is used by Employer on Employee's Cessation of Employment (Private) |
|
|
4 |
CP22B |
Form is used by Employer on Employee's Cessation of Employment (Government Agencies) |
|
|
5 |
TP1 |
Deduction and Individual Rebate Claim Form for purposes of Monthly Tax Deduction (STD) |
|
|
6 |
TP3 |
Employment Related Information Form with Earlier Employers during the Current Year for MTD Purposes |
B. Statutory Compliance Release Date:
- CP Forms: January 11, 2021
- TP Forms: January 05, 2021
C. Effective Date: January 1, 2021
A. Update
The Employees Provident Fund (‘EPF’) Board has informed by Press release dated November 28, 2020 that for the Calendar year 2021, the employee’s mandatory contribution rate will be reduced from Eleven (11) per cent to Nine (9) per cent while the employer’s contribution remains the same. The intent of the reduction is to increase the take home pay of the employees, however this will reduce the savings in their EPF account.
The above reduction is applicable only for EPF members below the age of 60 years old and who are liable to contribute. For members who are 60 years old and above, the statutory contribution rate for employees remains unchanged.
Further as per the FAQs released the following details have been clarified:
- The new rates will be in effect for an entire year, affecting wages for the months of January 2021 (i.e. February 2021’s contribution) up to December 2021 (i.e. January 2022’s contribution).
- Members who wish to maintain the contribution rate for employees at 11 per cent may fill in the Borang KWSP 17A (Khas 2021) form 2 , which is available on the EPF website (www.kwsp.gov.my)
- Employers will then be required to key in their employees’ application online via i-Akaun (Employer). Despite employees being able to submit the Borang KWSP 17A (Khas 2021) form as early as December 01, 2020, employers are only allowed to key in on i-Akaun (Employer) starting from December 14, 2020
- Employers are also required to keep the form received for their record.
- The above contribution rates are stated in the Third Schedule of the EPF Act 1991 as provided below and the same shall be available on EPF website www.kwsp.gov.my beginning December 15, 2020:
- Malaysian employees who have yet to reach 60 years old (Section A – Third Schedule).
- Non-Malaysian employees who have yet to reach 60 years old (Section B – Third Schedule).
B. Statutory Compliance Release Date: November 28, 2020
C. Effective Date: January 01, 2021
A. Update
Finance Minister of Malaysia, Tengku Datuk Seri Zafrul Tengku Abdul Aziz unveiled Budget for 2021 on November 6, 2020 amidst much anticipations. The proposals have now been tabled before the parliament for approval and will be gazetted once approved. The salient tax-centric proposals of Budget 2021 include:
1. Review of Income tax rate for resident individual
It is proposed that the income tax rate for resident individuals be reduced by 1 percentage (%) point for the chargeable income band of RM 50,001 to RM 70,000 from 14% to 13%.
| Chargeable income (RM) | Existing Tax rates (%) | Proposed Tax rate (%) |
|---|---|---|
| 0 - 5,000 | 0 | 0 |
| 5,001 – 20,000 | 1 | 1 |
| 20,001 – 35,000 | 3 | 3 |
| 35,001 – 50,000 | 8 | 8 |
| 50,001 – 70,000 | 14 | 13 |
| 70,001 – 100,000 | 21 | 21 |
| 100,001 – 250,000 | 24 | 24 |
| 250,001 – 400,000 | 24.5 | 24.5 |
| 400,001 – 600,000 | 25 | 25 |
| 600,001 – 1,000,000 | 26 | 26 |
| 1,000,001- 2,000,000 | 28 | 28 |
| 2,000,001 and above | 30 | 30 |
Effective Date: Assessment Year (AY) 2021
2. Change in the limit of income tax relief on expenditures of Medical Treatment, Special Needs or Carer Expenses
It is proposed to increase the Income tax relief on medical treatment, special needs or Carer Expenses, paid by resident individual to medical practitioner, registered with the Malaysian Medical Council (‘MMC’) from RM 5,000 to RM 8,000.
Effective Date: Assessment Year 2021
3. Increase in income tax relief on disabled Spouse
It is proposed to increase the tax relief on disabled husband /wife i.e. Spouse from RM 3,500 to RM 5,000.
Effective Date: Assessment Year 2021
4. Extension of resident individual income tax relief on Private Retirement Scheme (‘PRS’)
It is proposed to extend the income tax relief of RM 3,000 on Private Retirement Scheme (‘PRS’) for another 4 years.
Effective Date: Assessment Years 2022 to 2025
5. Change in tax relief of resident individual income on self /spouse /children medical expenses
It is proposed that the relief on medical expenses incurred on self/spouse /children on serious illness will be increased from RM 6,000 to RM 8,000 of which:
- The complete medical examination expenses will be increased from RM 500 to RM 1,000; and
- The tax relief on medical expenses incurred on self /spouse /children will be expanded to include vaccination expenses up to RM 1,000. The vaccines eligible for the tax relief are as follows:
- a. Pneumococcal;
- b. Human Papillomavirus (‘HPV’);
- c. Influenza;
- d. Rotavirus;
- e. Varicella;
- f. Meningococcal;
- g. Combination of tetanus, diphtheria and acellular pertussis (‘Tdap’); and
- h. COVID-19 (subject to availability of vaccine)
Presently, a resident individual taxpayer is eligible to claim income tax relief on medical expenses incurred on self /spouse /children on serious illness up to RM 6,000 per year of assessment. This includes expenses for a complete medical examination for the taxpayer, spouse and children not exceeding RM 500 per annum
Effective Date: Assessment Year 2021
6. Extension of resident individual income tax relief on net annual savings in the National Education Savings Scheme
Tax relief of RM 8,000 on net annual savings to the National Education Savings Scheme (Skim Simpanan Pendidikan Nasional – SSPN) by an individual taxpayer is proposed to be extended for another 2 years.
Effective Date: Assessment Year 2021 & 2022
7. Increase in income tax relief on lifestyle expenses of resident individual
It is proposed that:
- The relief on lifestyle expenses be increased from RM 2,500 to RM 3,000, where the additional of RM 500 be allocated for the cost of purchasing sports equipment, entry /rental fees for sports facilities and participation fees in sports competitions; and
- The scope of relief for printed daily newspapers will be expanded to include subscription of electronic newspapers.
Presently, a resident individual taxpayer is eligible to claim income tax relief up to RM 2,500 on lifestyle expenses incurred on purchase of reading materials; printed daily newspapers; sports equipment; computer, smartphone or tablet; subscription of broadband internet; and gymnasium membership fee.
Effective Date: Assessment Year 2021
8. Expansion of the scope of resident individual income tax relief for expenses on study fees
It is proposed that:
- The scope of relief be expanded to cover fees for attending upskilling and self- enhancement courses in any field of skills recognised by the Department of Skills Development, Ministry of Human Resources; and
- The tax relief on this additional scope is limited to RM 1,000 for each year of assessment.
Presently, an individual taxpayer who pursues any course of study in selected fields or Master or Doctorate in any field offered by institutions or professional bodies in Malaysia recognised by the Government of Malaysia or approved by the Minister of Finance are eligible to claim a maximum of RM 7,000 tax relief on study fees.
The eligible fields of study are as under:
- Certificate/ Diploma/ Bachelor in field of Law, accounting, Islamic finance, skills or vocational, technical, industrial, scientific and technological skills
- Masters/ Doctorate in all fields
Effective Date: Assessment Year 2021 & 2022
9. Increase in the limit of income tax exemption on compensation for loss of employment
Section 13(1)(e) of the Income Tax Act 1967 provides that compensation received for loss of employment is taxable on individuals. However, individuals with loss of employment are eligible to claim for exemptions provided under Paragraph 15(1) of Schedule 6 of the Income Tax Act 1967 under the following circumstances:
- 100% tax exemption on the compensation for loss of employment due to ill health; or
- RM 10,000 income tax exemption for each full year of service with the same employer or companies within the same group
To assist taxpayers who lose their jobs due to the COVID-19 pandemic, it is proposed that the exemption limit in (ii) be increased from RM 10,000 to RM 20,000 for each full year of service.
Effective Date: Assessment Year 2020 & 2021
10. Preferential tax rate
A tax rate of 15% for five (5) consecutive years is proposed for non-Malaysian citizens holding key positions / C-Suite positions in companies who relocate their operations to Malaysia under the PENJANA incentive package. This preferential tax rate is subject to following conditions:
- (i) Holding the key position for a period of five (5) consecutive years;
- (ii) Receiving a monthly salary of not less than RM 25,000; and
- (iii) A Malaysian tax resident for each year of assessment throughout the flat rate tax treatment.
This tax incentive is limited to five (5) non-citizen individuals employed in each company that has been granted relocation tax incentive under PENJANA initiative.
Effective Date: Applicable for applications received by the Malaysian Investment and Development Authority from November 7, 2020 until December 31, 2021.
11. Returning Expert Programme (‘REP’)
Currently, flat rate of 15% on employment income for five consecutive years. Effective date of this incentive was till the applications received by TalentCorp up to December 31, 2020. The Government now proposes to provide a flat rate of 15% on employment income for five (5) more consecutive years. Effective period is now further increased for applications till December 31, 2023
12. Reduction of employee’s contributions to the Employees’ Provident Fund (‘EPF’)
The Government will leverage on the EPF to increase the disposable income of individuals. It is proposed that the rate of employee’s contribution to the EPF be reduced from 11% to 9% for a period of 12 months beginning January 2021.
Effective Date: January 01, 2021 to December 31, 2021
13. Introduction of Wakaf services
Permodalan Nasional Berhad (‘PNB’) through Amanah Saham Nasional Berhad (‘ASNB’) will introduce wakaf services to all ASNB unit trust holders. Under this service, unit holders can endow some of their units into ASNB wakaf fund and be eligible for an income tax deduction.
Effective Date: To be confirmed
A. Update
The Malaysia Government has released 2020 version of form CP22 . Please note that except for new additions such as gender, citizen, passport number, overall presentations etc, there are not much changes.
Form CP 22 is New Employee Notification Form. This form must be submitted within one month from the date of commencement of employment.
B. Statutory Compliance Release Date: July 01, 2020
C. Effective Date: January 01, 2020
A. Update
Further to earlier update in the last release on reduction of EPF contribution rate change, the Inland Revenue Board has now notified the revised EPF contribution rate table.
B. Statutory Compliance Release Date: March 30, 2020
C. Effective Date: FY 2020
A. Update
On 26 March 2020, in order to ease the financial burden faced by employers due to the effects of Coronavirus (COVID-19), the Honorable Human Resources Minister of Malaysia announced that employers categorized within all 63 sub-sectors, stipulated under the sectors of Manufacturing, Services Sector and Mining and Quarrying Sector, affected by the Coronavirus (COVID-19) pandemic will be exempted from paying the human resources development levy for a period of 6 months effective from April 2020 to September 2020 .
Accordingly, Employers are exempted from paying levy for the months of March 2020 to August 2020
B. Statutory Compliance Release Date: March 26, 2020
C. Effective Date: March 26, 2020
A. Update
In light of the ongoing Covid 19 pandemic, the Malaysian Government has announced fourth economic relief package named ‘PENJANA’ to reopen the economy.
- Employees who received benefits-in-kind in the form of mobile phones, laptop or tablet from the employer for the purpose of working from home will be entitled to an income tax exemption of up to MYR 5,000
- Special individual income tax relief of up to RM2,500 on the purchase of handphone, notebook & tablet
- Individuals who incur childcare expenses will be entitled to a personal relief of MYR 3,000.
- The domestic tourism relief of MYR 1,000 will be extended to year of assessment 2021 i.e. from March 1, 2020 till Dec 31, 2021
The above amendments are still in proposal stage. We shall analyse further details once the same is passed in a Gazette.
B. Statutory Compliance Release Date: February 01, 2020
C. Effective Date: April 01, 2020
- Tax exemptions for BIK: July 1, 2020
- Special individual income tax relief: June 1, 2020
- Domestic tourism: March 1, 2020
A. Update
In order to further support stable employment and ensure employment, and reduce the tax burden of the new recruits' personal income tax withholding, the following is an announcement1 regarding the improvement and adjustment of the personal income tax withholding for those who obtain wages and salary income for the first time in the middle of the year:
- For a resident individual who obtains income from wages and salaries for the first time in a tax year, the withholding agent can calculate the cumulative standard deduction by multiplying 5000 Yuan per month by the number of months ending in the taxpayer's current year. This means that in the first month of employment of such first-time earners, cumulative standard deduction shall be granted starting from January till the month of tax withholding in a tax year.
For example, for a fresh graduate who commences employment on July 01, 2020 and receives the first salary for July, the deduction for that month will be the standard monthly amount of CNY 5,000 plus the accumulated deductions of CNY 30,000 for 6 months, from January to June, prior to the commencement of the first employment, i.e. CNY 35,000 in total. - If a student receiving full-time academic education obtains labor remuneration for internship, the withholding agent should withhold personal income tax in the erstwhile cumulative manner, without giving effect to this announcement. In short, this announcement is not applicable to interns.
- Employees who comply with the provisions of this announcement should promptly declare to the withholding agent/employer and truthfully provide the relevant supporting materials or undertakings. Such supporting materials or undertakings should be kept for future reference.
