Personal Income Tax Planning

Malaysia Personal Tax Information You Must Know

To determine an individual's income tax liability in Malaysia, several key points must be considered:

1. Tax is payable by residents on their taxable income at progressive rates ranging from 0% to 30% starting from the Year of Assessment 2020. Non-residents face withholding taxes on specific types of income, while other income is taxed at a flat rate of 30%.

2. Both residents and non-residents are taxed on Malaysian-source income only. Additionally, as of January 1, 2004, remittances of foreign-source income into Malaysia are exempt from Malaysian Income Tax.

3. Tax regulations vary depending on the tax residency status of the individual.

4. Income tax is calculated on a current-year basis, with the tax year referred to as the Year of Assessment (YA), spanning from January 1 to December 31.

Please click Income Tax Rates for details about the personal income tax rate for resident.

Kindly take note of the following key dates which related to the filing of personal tax.

• Delivery of Form EA by the employer to employee no later than last day of February of the following year

• The deadline for filing of Form BE, BT, M, MT by the a person not carrying business (generally refer to employee) is by 30 April of the following year

• The deadline for filing of Form B by the a person carrying a business such as sole proprietor is by 30 June of the following year

• The deadline for filing Form P by a partnership excluding limited liability partnerships, LLPs is by 30 June of the following year

Employers’ Responsibilities

Form CP 22

Notification of New Employee – an employer is required to notify the Inland Revenue Board (IRB) via Form CP22 of the commencement of employment of its employees in Malaysia within one month of the date of commencement of employment.

Form CP 22A

Cessation of Employment – an employer is required to notify the IRB of the cessation of employment of an employee by the completion of Form CP22A at least 30 days before the date of cessation unless the employee is subject to the Monthly Tax Deduction (MTD) and deduction has been made by the employer or whose income is below the minimum amount subject to MTD, and employer is aware that the employee is to be employed elsewhere in Malaysia.

Form CP21

Departure from Malaysia for a Period Exceeding 3 Months – an employer is required to notify the IRB of departure of an employee (most of the case will be expatriate) from Malaysia for a period of more than 3 months by the completion of Form CP21. The employer is required to withhold any money in the employer’s possession owing to the expatriate who has ceased or is about to cease employment until 90 days after the IRB receives the Form CP21 or upon receipt of the tax clearance letter, whichever is earlier. The employer can then release the balance of money withheld from the employee after the settlement of the outstanding taxes (if any) as shown in the tax clearance letter.

Form E

Every employer must furnish the Form E of its employees’ employment income no later than 31 March of the following year.

Form EA

Statement of remuneration (Form EA) completed and provided to the employee on or before the last day of February of the following year for employee’s personal income tax purpose. Form EA is not required to be sent to IRB.

*Monthly Tax Deduction (MTD) scheme

Tax withholdings from employment income are covered by the MTD system.

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 MTD 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 employee’s information in a return (Form CP39/CP39A) when submitting MTD payments/additional deductions.

• Keep and retain in safe custody sufficient documents for a period of seven years from the end of the calendar year in which the remuneration is deducted in respect of his employee according to the MTD Rules.

• Inform every employee of his following responsibilities:

  • to submit a TP3 Form to the employer to notify information relating to his employment with previous employer in the current year.

  • to submit a TP1 Form to the employer if employee wishes to claim deductions and rebates in the relevant month. The deductions and rebate will be effected subject to approval by employer.

  • to submit a TP2 Form if employee wishes to include benefits in kind (BIK) and value of living accommodation (VOLA) as part of his monthly remuneration in ascertaining the MTD amount subject to approval by employer.

  • to keep and retain in safe custody each and every receipt relating to claims of deductions for a period of seven years from the end of that year of assessment under the Act.

  • to furnish complete and accurate personal information and update any changes of his personal particulars to the employer.

  • to furnish correct information in a prescribed form relating to his own chargeability to tax and failure by the employee to do so constitutes an offence

For more information on MTD: www.hasil.gov.my

New statutory provisions in Malaysia have been enacted that amend the definition of “remuneration” for MTD. Employers should be aware that for certain employees who have an income tax liability in Malaysia, their compliance responsibilities have changed. For information, please refer Important Changes to Monthly Tax Deduction Rules

Employees/ Sole Proprietorship/Self Employed Responsibilities

Form BE

Resident Who Does Not Carries On Business

Form BT

Resident individual (Knowledge/Expert Worker)

Form M

Non-resident individual

Form MT

Non resident individual (Knowledge/Expert Worker)

By 30 April of the following year for All the Above 

Form M

Non-resident individual (with business income)

Form MT

Non resident individual (Knowledge/Expert Worker with business income)

Form B

Resident individual who carries on business

Form P

Partnership

By 30 June of the following year for All the Above 

You may file your tax return using any of the following modes:

• E-Filing:

• You can e-File your tax returns via ezHASil e-Filing. The e-filling system is convenient, fast and more accurate – system computes the tax payables automatically after you key-in your income, deduction, relief and rebate.

• You may also e-filing your tax return by using your smart phone or tablet. The taxpayers can access the system at mlatihan.hasil.gov.my from the supported devices such as iPhone and iPad with iOS version 4.0 and above; Android version 2.2 (Froyo) and above; BlackBerry (OS 6 and above) and Playbook; Windows Phone version 7.0 and above and 7.5 (Mango) recommended

• Generally, the IRB will grant 2 weeks extension on the Tax Return’s filling deadline vide e-filling to encourage more e-filing. To ensure you file your Tax Return before the deadline, please always check the current YA’s filling deadline at IRB official website www.hasil.gov.my

• The lRB now has to pay interest to taxpayers if they do not process their refund within 90 days from the due date (electronic filing) or 120 days from the due date (manual filing). Therefore, filling your tax electronically also means you can get your refund faster

  • View ezHASiL Centralized Interface User Manual.

  • If you yet register for a tax-file, you can register at the nearest or any other LHDN branch of your convenience or register online through e-Daftar. Please click here for more information on tax registration for individuals

  • Filing using a paper-based tax return:

  • You should have received the Tax Return Form from IRB by mail 2 months before the filling deadline if you filed your Tax Return using paper-based form for prior years.

  • If you don’t receive the relevant Form, you may collect the form at any LHDN branch or print the softcopy of the form from LHDN website. Only Malay version of the form can be used for tax submission purpose and must fulfil the printing requirements specified by IRB.

Partnerships’ Responsibilities

Filing income Tax

While a partnership does not pay tax, it still has to file an annual income tax return (called the Form P) to show all income earned and business expenses deducted by the partnership during the year. The partnership could file Form P through paper-form submission or e-filling.

The deadline for filing Form P is 30 June.

The precedent partner is responsible for filling out the Form P and issuing the Form CP30 to each and every partner. The Form CP30 (Apportionment Of Partnership Income) has to be provided to each partner so as to enable them to declare their partnership income within the stipulated period i.e. 30 June for individual and 7 months after closing of financial year for companies.