Individual
Your Responsibility
Taxpayer Responsibilities
Every individual who is liable to tax is required to declare his income to IRBM. The taxpayer is responsible for:-
- Obtaining and forwarding Income Tax Return Form (ITRF):
The taxpayer has to send or submit the ITRF that has been duly completed before 30th April every year to the address below :-Information Processing Department
Inland Revenue Board of Malaysia
Level 10-18, Tower C
Persiaran MPAJ
Jalan Pandan Utama
Pandan Indah
55100 Kuala Lumpur - Declaring income and claiming expenses.
- Computing income tax payable.
- Keeping records for audit purposes.
- Paying the income tax payable.
Record Keeping
Taxpayer is required to keep the following documents for 7 years:
- EA/EC Form
- Original dividend vouchers
- Insurance premium receipts
- Books purchase receipts
- Medical receipts
- Donation receipts
- Zakat receipts
- Children`s birth certificates
- Marriage certificate
- Other supporting documents
- Working sheets (if any)
The calculation of the 7 year period begins from the end of the year in which the ITRF is filed.
Tax Evasion Reporting
Please contact us if you have information on tax evasion
- How to Lodge Your Report :
- Write in to :
Intelligence Division,
CEO Office,
Inland Revenue Board of Malaysia,
Level 6, Menara Hasil,
Persiaran Rimba Permai,
Cyber 8, P.O Box 11833,
63000 Cyberjaya,
Selangor. - e-mail us at :
pelariancukai@hasil.gov.my (Tax Evasion Report) - Call us at :
03-8313 8888 (ext: 20601 and 20607)
03-83138883 (direct line) - Fax : 03-8313 7810
- Walk in personally to our office at the above address OR nearest Investigation Branch office.
- Information required of tax evader :
- Name, IC number, full address.
- Nature of evasion.
- Supporting documents (if any).
- Other relevant information.
- Reward :Given at the discretion of IRBM based on accuracy and reliability of the information given.
- Secrecy :Your identity and the information given will be confidential.
BE A RESPONSIBLE CITIZEN
HELP US CURB TAX EVASION |
Self Assessment System (SAS)
Tax administration under SAS is based on the concept Pay, Self Assess and File
Pay : Monthly salary deductions are made for individuals having employment income, or through instalments for individuals having business income.
Self Assess : Taxpayers compute their own taxes.
File : The ITRF is submitted to the IRBM together with the payment for the balance of the income tax payable to meet any shortfall in the monthly payments or a claim for repayment if there is an overpayment.
Taxpayer Responsibilities
Pay : Monthly salary deductions are made for individuals having employment income, or through instalments for individuals having business income.
Self Assess : Taxpayers compute their own taxes.
File : The ITRF is submitted to the IRBM together with the payment for the balance of the income tax payable to meet any shortfall in the monthly payments or a claim for repayment if there is an overpayment.
Company
Taxpayer Responsibilities
Every taxpayer who is liable to tax is required to declare his income to IRBM. The taxpayer is responsible for:-
- Obtaining and forwarding Income Tax Return Form (ITRF).
A company has to send or return the ITRF that has been duly filled, without attached documents, to the address below within 7 months after the close of the accounting period.
Information Processing Department
Inland Revenue Board of Malaysia
Level 10-18, Tower C
Persiaran MPAJ
Jalan Pandan Utama
Pandan Indah
55100 Kuala Lumpur
Supporting documents need not be enclosed, except that in repayment cases, dividend vouchers need to be enclosed with the ITRF. - Submitting tax estimation and paying instalment within the stipulated period
- Computing the company income tax
- Declaring income and expenses including deductions and rebates.
- Keeping records for audit purposes
Report Tax Evasion
Please contact us if you have information on tax evasion
- How to Lodge Your Report
- Write in to :
Intelligence Division,
CEO Office,
Inland Revenue Board of Malaysia,
Level 6, Menara Hasil ,
Persiaran Rimba Permai,
Cyber 8, P.O box 11833,
63000, Cyberjaya
Selangor. - e-mail us at :
pelariancukai@hasil.gov.my (Tax Evasion Report) - Call us at :
03-83138888 (ext: 20601 and 20607)
03-83138883 (direct line) - Fax : 03-83137810
- Walk in personally to our office at the above address OR nearest Investigation Branch office
- Information required of tax evader :
- Name, IC number, full address.
- Nature of evasion.
- Supporting documents (if any).
- Other relevant information
- Reward :Given at the discretion of IRBM based on accuracy and reliability of the information given.
- Secrecy :Your identity and the information given will be confidential.
BE A RESPONSIBLE CITIZEN HELP US CURB TAX EVASION
Tax Rate of Company
Year Assessment 2007:
| 20% 27% |
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27%
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Year Assessment 2008:
| 20% 26% |
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26%
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Year Assessment 2009 onwards:
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20%
25% |
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25%
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Tax Payment
Instalment Payment CP204
For existing companies, the estimated tax payable has to be paid in equal monthly instalments beginning from the second month of the basis period for a year of assessment.
Example:
Example:
| Total months in the basis period | = | 12 months | ||
| Tax Estimate | = | RM12,000 | ||
| Monthly Installments | = | RM12,000 | ||
| = | RM12,000/12 | = | RM1000 |
For new companies, instalment payments must commence in the 6th month of the basis period for the year of assessment i.e. payable in the 6th month after the company commences operations. A company is required to pay the instalment of the estimated tax by the 10th day of each month.
Balance of Tax Payment
When a company has determined its actual tax payable, balance of tax which is the actual tax payable after deducting total instalments on the tax estimate, has to be paid within 7 months from the close of the accounting period. Please use the CP207 Form payment slip which is provided together with the C Form to make payment.
Penalty Under Instalment Scheme
- If a company fails to pay the monthly instalment on the tax estimate by the stipulated date, a late payment penalty of 10% will be imposed on the balance of tax instalment not paid for the month.
- If the difference between the actual tax payable and the estimated tax payable (if the revised estimate is not furnished) is more than 30 % of the actual tax payable, a 10% increase in tax will be imposed on that difference.
The formula for calculating the amount of tax to be increased is as follows:
Amount of tax to be increased = {(AT-ET) - (30% x AT)} x 10%
where:
AT: actual tax payable
ET: revised estimated tax payable or estimated tax payable (if no revised
estimate is furnished)
Amount of tax to be increased = {(AT-ET) - (30% x AT)} x 10%
where:
AT: actual tax payable
ET: revised estimated tax payable or estimated tax payable (if no revised
estimate is furnished)
Penalty for Late Payment
If the balance of tax payable is not paid by the due date, a penalty of 10% will be imposed on the outstanding amount. If the tax payable and penalty is still outstanding within 60 days from the due date, an additional penalty of 5% will be imposed on the tax and penalty outstanding.
Appeal on Penalty
An appeal in writing within 30 days from the statement of account can be submitted to the relevant branch (Collections Unit), if the company does not agree with the late payment penalty imposed.
The company has to pay its tax liability first irrespective of any appeal.
The company has to pay its tax liability first irrespective of any appeal.
Mode of Payment
Payment At IRBM Payment Counters
Payment can be made at any IRBM payment counters. Every payment needs to be attached with CP 207 payment slip which has been sent to the company. There are 3 IRBM payments counter in Malaysia which is Jalan Duta Payment Counter for Peninsular Malaysia, Kuching Payment Counter for Sarawak & Kota Kinabalu Payment Counter for Sabah. To obtain full address of our payment counters, please select fax option in the next menu.
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Payment By Post
Payment by post has to be made using crossed cheque/bank draft and made payable to "THE DIRECTOR GENERAL OF INLAND REVENUE". State the name of the company, the tax reference number, installment number, year of assessment and the address on the reverse side of the cheque. Post dated cheques and cheques issued by banks outside Malaysia will not be accepted. Please do not send cash through the post. Cheque/bank draft has to be submitted to one of the collection departments either collection department in Jalan Duta or collection unit in Kuching or Kota Kinabalu. To obtain full address of our collection branches, please select fax option in the next menu.
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Payment At Bank
Tax payment can also be made at any CIMB Bank, Public Bank, Maybank, Affin Bank, and POS Malaysia counters throughout Malaysia. Please use the CP 207 payment slip as a guide to fill up IRBM's Bank In Slip provided at the bank to make payment. The customer's copy of the bank in slip must be kept as a proof of payment. The IRBM will not issue any other receipt for payments made through the bank.
Payment Through Internet
Balance of tax or CP 204 installment payments can also be made through internet banking of Public Bank, Maybank, Hong Leong Bank , Citibank and POS Online.
Beside that, a company can also use the e-Payment service which is provided through this web site. This service uses the Financial Process Exchange (FPX) and users must have an internet banking account with any of the following bank;
- Bank Islam Malaysia Berhad
- CIMB Bank
- Hong Leong Bank Berhad
- Maybank2e / Maybank2U
- Public Bank Berhad
- RHB Bank
Acknowledgment of receipt issued through internet banking must be kept as proof of payment.
Payment Of Income Tax Through Monetary Transfer From Overseas
Payment of income tax through monetary transfer from overseas can be done in two ways which are:-
- By Telegraphic Transfer (TT)Monetary transfer from overseas through this method requires you to forward the following information:-
- Payable to : Director General Inland Revenue
- Name and address of payee bank : CIMB Bank Berhad, Jalan Duta Branch Ground Floor, Block 8, Government Offices Complex, Jalan Duta,50480 Kuala Lumpur, Malaysia
- Payee Account Number: 1423-0004076-055
- Swift Code : CIBBMYKL
- Sort Code : N/A
The above information has to be faxed to the payment counter in Jalan Duta at 03-62016857 to enable an official receipt to be issued. - By Bank DraftMonetary transfer from overseas by this method requires you to forward the following information:-
- Payable to : Director General Inland Revenue
- Name and address of payer bank:- must be 'local paying bank' or 'local correspondence bank' so that the draft becomes a local cheque.
Bank draft cannot be bought in RM. Therefore, please ensure that the currency exchange for the amount to be paid is accurate. Payment and payer details must be written at the back of the bank draft and then posted to the address below:-
Payment Counter
Ground Floor, Block 8A
Government Offices Complex, Jalan Duta
50600 KUALA LUMPUR
Application To Pay Balance of Tax by Instalments
If the company has not fully paid the tax for that period, the company can apply to pay the balance of tax by instalments. The company can request in writing to the Collection Unit before the last date of payment of the relevant year. However, please note that even if the request is accepted, late payment penalty will still be imposed.
Enquiry of Tax Position
Detailed Payment Records
Any enquiry regarding detailed payment records can be made by calling the collection branch where your physical file is located.
Application of Tax Position
If you require a statement of your tax position, you can obtain it by calling or writing to the collection unit of the branch where your physical file is located.
Non-Resident Company
Scope of Taxation
Liable to Malaysian tax when it carries on a business through a permanent establishment in Malaysia and assessable on income accruing in or derived from Malaysia.
Non-resident Tax rate
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| Who Needs To Register Tax File |
For a business or company which has employees shall register employer tax file.
How to Register Tax File
Application to register an income tax reference number can be made at the nearest branch to your correspondence address or at any IRBM branch of your convenience without reference to your correspondence address. Application to register can also be made through online via e-Daftar.
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| Sole Proprietor and Partnership |
Please forward the following documents together with the application form to register an income tax reference number (E-number):-
Application form to register an income tax reference number can be obtained from the nearest IRBM counter.
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| Company |
Please forward the following documents together with the application form to register an income tax reference number (E-Number):-
All the documents must be certified by the company secretary.
Application form to register an income tax reference number can be obtained from the nearest IRBM counter.
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After the employer tax reference number has been registered, the employer is required to determine MTD calculation is accordance with Income Tax (Deduction From Remuneration) Rules 1994 (MTD Rules) according to Explanatory Notes gazette by IRBM.
Employer shall pay to the Director General, not later than the tenth 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. Every employer shall, for each year, prepare and render to his employee a statement of remuneration of that employee C.P.8A (EA) and C.P.8C (EC) form on or before the last day of February in the year immediately following the first-mentioned year in order for each employee to fill and submit return form in accordance to subsection 83(1A), Income Tax Act 1967(Act). Every employer shall, for each year, furnish to the Director General a return in the prescribed form (E form) not later than 31 March in the year immediately following the first-mentioned year in accordance to subsection 83(1), Act.
SCHEDULE OF MONTHLY TAX DEDUCTION :
LIST OF SOFTWARE PROVIDER/EMPLOYER WHO COMPLIED WITH THE MTD CALCULATION SPECIFICATION :
MTD 2012:
MTD 2013:
Employer's Responsiblities
Employer's responsibilities under the MTD Rules are as follows:
If the employer fails to furnish a complete and accurate information, MTD payment will not be accepted. Resubmission of MTD payment may be compounded if payment is made after the tenth day of the following month.
Schedule of Monthly Tax Deductions
Schedule of Monthly Tax Deductions is issued by Inland Revenue Board of Malaysia (IRBM) for employer who does not use computerised payroll software. Employee Category
Schedule of Monthly Tax Deductions and the Computerised Calculation Method classifies employee into 3 categories:
Category 1 : Single
Category 2 : Married and spouse is not working Category 3 : Married and spouse is working
Category 3 of the Schedule of Monthly Tax Deductions or the Computerised Calculation Method is applicable where an employee is divorced, widowed or a single (with adopted children).
Where a wife who elects to claim all child deductions, her MTD is ascertained under Category 3 (KA1 – KA20) while MTD for the husband is ascertained under Category 3 (K).
Where a husband and wife elect to claim deduction for certain child, MTD for husband and wife is ascertained under Category 3 (KA1 – KA20).
Example :
A working husband and wife with 5 children. The husband claims child deduction for their 3 children and the wife claims for the remaining 2 children. MTD is ascertained as follows:
Husband - Category 3 (KA3)
Wife - Category 3 (KA2)
MTD is ascertained under Category 3 (KA1 – KA20) for an employee who is single with an adopted child.
MTD for Monthly Remuneration
Before MTD can be determined, an employer must take into account 3 factors relating to his employee. The factors are :
Employer whose compute PCB using the computerised calculation method, such as ‘Kalkulator PCB’, e-PCB, computerised payroll system, or inhouse/customise payroll system which had verified by IRBM shall base on gross taxable remuneration less total contribution monthly EPF (inclusive EPF for non taxable remuneration/allowance) limited to RM6,000.
The MTD payment will be rejected by IRBM if employer fails to provide complete and accurate information. Resubmission of MTD payment will be subject to compound if the payment is made after the due date.
Use separate CP39 if payment is made for different months. Filling Up Form CP39
Filling Up Form CP39A (Arrears payment for prior years received in current year)
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Less : EPF | RM 396.00 | |||
Net remuneration | RM3,204.00 | |||
MTD on RM3,204 = RM48.00 [Refer MTD Schedule 2004].
[B] (1/12 X Nett Bonus) + Monthly net remuneration
Total Bonus | RM7,200.00 | |
Less : EPF* | RM 104.00 | |
Net Bonus | RM7,096.00 | |
*Deduction for EPF is limited to RM500 per month. [RM500 - RM396.00 = RM104.00]. | ||
(1/12 X RM7,096.00) + RM3,204.00 = RM3,795.00
[[C] Determine the tax deduction on [B].
MTD on RM3,795.00 = RM102.00
[[D] Determine the tax deduction on additional remuneration.
(RM102.00 – RM48.00) X 12 = RM648.00
[E] Total amount of tax to be deducted in the month that Bonus is paid will be [A] + [D].
RM48.00 + RM648.00 = RM696.00
MTD for month of December is RM 696 and pay using Form CP39 only.
Example 2 : Year 2007 additional remuneration paid in 2008
Refer to example 1, for July year 2008, He also received arrears of salary for 2007 amounting to RM1,200. Please compute January PCB for En. Ali.
Refer to example 1, for July year 2008, He also received arrears of salary for 2007 amounting to RM1,200. Please compute January PCB for En. Ali.
Computation :
MTD Category : CATEGORY 3/KA2
[A] Determine the MTD on monthly remuneration (not including additional remuneration).
Monthly remuneration | RM3,600.00 | |||
Less : EPF | RM 396.00 | |||
Net remuneration | RM3,204.00 | |||
MTD on RM3,204 = RM48.00 [Refer MTD Schedule 2004].
[B] (1/12 X Nett Bonus) + Monthly net remuneration
Total Bonus | RM1,200.00 | |
Less : EPF* | RM 104.00 | |
Net Bonus | RM1,096.00 | |
*Deduction for EPF is limited to RM500 per month. [RM500 - RM396.00 = RM104.00]. | ||
(1/12 X RM1,096.00) + RM3,204.00 = RM3,295.00
[C] Determine the MTD on [B].
MTD on RM3,295.00 = RM50.00
[D] Determine the MTD on additional remuneration.
(RM50.00 – RM48.00) X 12 = RM24.00
[E] Total amount of MTD to be deducted in the month that arrears salary paid will be
= RM24.00 (use Form CP39A)
MTD computation for additional remuneration year 2009 onward
Remuneration
Remuneration means income in respect of the gains or profits from an employment other than benefits in kind under paragraphs 13(1)(b) and 13(1)(c) of the Act provided that in a case where an irrevocable election is made by an employee under rule 2A, the gains or profits from an employment shall include the benefits in kind under paragraphs 13(1)(b) and 13(1)(c) of the Act.
“Normal remuneration” means monthly fixed remuneration paid to an employee whether the amount is fixed or variable as stated in the employment contract written or otherwise.
“Normal remuneration” means monthly fixed remuneration paid to an employee whether the amount is fixed or variable as stated in the employment contract written or otherwise.
“Additional remuneration” means any payment paid to an employee either in one lump sum or periodical or in arrears or non fixed payment or any additional payment to a current month's normal remuneration. Such additional remuneration includes:
- overtime allowance
- bonus/incentive
- arrears of salary or any other arrears paid to an employee
- employee's share option scheme (if employee opts for MTD deduction)
- tax borne by employer
- gratuity
- compensation for loss of employment
- ex-gratia
- director's fee (not paid monthly)
- commissions
- allowances (variable amount either paid every month or not )
- any other payment in addition to normal remuneration for current month
Types of Remuneration Subject to MTD
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Note: Beginning from the year of assessment 2009, director fees or bonus relating to a year which is received in any current year, that remuneration becomes part of remuneration in the current year it is received.
Types of Remuneration Not Subject to MTD
BIK and VOLA are part of remuneration which is not subject to MTD. However, employee may make an irrevocable election to include the BIK and VOLA as part of his remuneration to be subject to MTD by completing a prescribed form and submit to employer. If employer agrees, BIK and VOLA are subjected to MTD.
- Benefits in Kind (BIK)
- Value of Living Accommodation (VOLA)
BIK is benefits not convertible into money. The benefits are to be treated as gross income from employment under paragraph 13(1)(b) of the Act.
VOLA is living accommodation provided for an employee by his employer. The value of the benefit is to be treated as gross income from employment under paragraph 13(1)(c) of the Act.
Deduction for Zakat
- Schedule of MTD
Where an employee has made zakat payments through salary to the religious authority, the employer upon receiving evidence of such payments may set-off those payments against the amount of tax to be deducted for the respective month.
Example 1: MTD for January 2010
RM
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MTD deductible according to schedule
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105.00
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Zakat paid
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55.00
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MTD to be deducted
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50.00
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(105.00 – 55.00)
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Example 2: MTD for February 2010
RM
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MTD deductible according to schedule
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110.00
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Zakat paid
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140.00
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MTD to be deducted
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Nil
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(110.00 - 140.00)
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The excess zakat of RM30 in Example 2 above may be carried forward to be off-set against the MTD of a subsequent month. However, please note that such adjustments are permissible only within the same year. That means, zakat paid in year 2010 can be deducted only with MTD to be deducted in year 2010 (current year).
If an employee makes tithes (zakat) payment other than the monthly zakat deduction, the employee may only re-adjust their MTD by using the Computerised Calculation Method by submitting the TP1 Form to their employer, subject to the employers approval.
- Computerised Calculation Method
If the payment for zakat to religious authority was made through salary deduction, employer needs to input the zakat amount in to the system in order for system to auto generate computation for MTD deduction.
However, if employee make zakat payment beside of monthly zakat deduction through salary, employee is allow to submit formTP1 subjected to employer approval to recomputed actual MTD amount.
- Additional Remuneration MTD computation for year 2009 onward.
There are two methods of formula for additional remuneration
Formula for additional Remuneration MTD computation as per PCB Notes or below is for employer who does not use computerised payroll software or proses payroll manually. How ever, IRBM is encourage empoyer to use 'Kalkulator PCB' or 'e-PCB' system/application developed by the IRBM.Step 1 – Determine MTD on net normal remuneration for a year (not including current month additional remuneration) and MTD for additional remuneration which has been paid.
[A] Determine category of employee.
[B] Determine net normal remuneration = Gross normal remuneration less (-) EPF or any other Approved Scheme (limited to RM500.00 per month or RM6,000.00 per year).
[C] Determine current month MTD for net normal remuneration in Step 1 [B].
MTD for current month = RMXXX [refer to Schedule of Monthly Tax Deductions]
Net MTD = MTD for current month – zakat and fee/levy for current month[D] Total MTD for a year = Total paid accumulated MTD + [MTD for current month at Step [C] x remaining month in a year include current month]
= X + [MTD for current month at Step [C] x (n + 1)]
Step 2 – Determine chargeable income for a year [P] (including additional remuneration for current month) and MTD for additional remuneration which has been paid.[A] Determine category of employee.
[B] Determine chargeable income for a year [P];
P = [( Y – K ) x 12] + [S(Yt1 – Kt1)] + (Yt – Kt) – ( D + S + 1000C)
Step 3 – Determine total tax for a year based on value of P in Step 2 [B]. Value of M, R and B are based on value as per Schedule 1 above.
Total tax for a year = (P – M) x R + B
Step 4 – Determine MTD for current month additional remuneration where total tax (Step 3) less total MTD for a year (Step 1[D]) and zakat which has been paid.
MTD for additional remuneration = Step 3 – [Step 1[D]+ zakat which has been paid]
Step 5 – MTD for current month which shall be paid.
= Net MTD + MTD for current month on additional remuneration = Step 1[C] + Step 4
- MTD Calculation Formula For Computerised Calculation Method
Computerised Calculation Method is applicable in any of the following circumstances:
Employer who use the system/application developed by the IRBM which can be obtained from the IRBM website.- Employer who use the computerised payroll system provided by the software provider or developed/customised by the employer in accordance with specifications determined and reviewed by the LHDNM.
- Employer who use the system/application developed by the IRBM which can be obtained from the IRBM website.
Formula for additional remuneration computerised calculation method is as below:
Step 1 – Determine MTD on net remuneration for a year (not including current month’s additional remuneration). - Employer who use the computerised payroll system provided by the software provider or developed/customised by the employer in accordance with specifications determined and reviewed by the LHDNM.
- Scenario for bonus and director’s fee payment and how to compute the MTD for Year 2009 onward:
Schedule 1: Value of P, M, R and B P
(RM)2,500 – 5,000 2,500 1 – 400 – 800 5,001 – 20,000 5,000 3 – 375 – 775 20,001 - 35,000 20,000 7 75 – 325 35,001 - 50,000 35,000 12 1,525 1,525 50,001 - 70,000 50,000 19 3,325 3,325 70,001 - 100,000 70,000 24 7,125 7,125 Above 100,000 100,000 26 14,325 14,325
A] Determine category of employee.
[B] Determine chargeable income for a year [P];
P = [S(Y– K*)+(Y1 – K1*)+[(Y2 – K2*) x n]+(Yt – Kt*)] – [D+S+1000C + (SLP + LP1)] where (Yt – Kt ) = 0
[C] Determine monthly MTD for net normal remuneration. Once value of P in Step [B] is determined, value of M, R and B are determined based on Schedule 1 above.
MTD for current month = [ (P – M) x R + B ] – (Z+ X ) n + 1
Net MTD = MTD for current month – zakat and fee/levy for current month.
[D] Determine total MTD for a year
Total MTD for a year = Total paid accumulated MTD + [MTD for current month at Step [C] x remaining month in a year include current month]
= X + [(MTD for current month at Step [C] x (n + 1)]
Step 2 – Determine chargeable income for a year [P] (including additional remuneration for current month) and additional remuneration which has been paid.
[A] Determine category of employee.
[B] Determine chargeable income for a year [P];
P = [S(Y–K*)+ (Y1 – K1*)+[(Y2 – K2*) x n]+(Yt – Kt*)] – [D+S+1000C + (SLP + LP1)]
Step 3 – Determine total tax for a year based on value of P in Step 2 [B]. Value of M, R and B are based on value as per Schedule 1 above.
Total tax for a year = (P – M) x R + B
Step 4 - Determine MTD for current month additional remuneration where total tax (Step 3) less total MTD for a year (Step 1[D]), zakat and fee/levy which have been paid.
MTD for additional remuneration = Step 3 – [Step 1[D] + zakat and fee/levy which has been paid]
Step 5 – MTD for current month which shall be paid.
= Net MTD + MTD for current month on additional remuneration
= Step 1[C] + Step 4
Year 2009 onward, director’s fee or bonus is receivable in respect of the whole or parts of the relevant period, the fee or bonus when receive in relevant period shall be treated as gross income in the year of receipt. MTD payments for additional remuneration bonus, director's fee and current month remuneration should pay under one CP39 form only as a single payment.However, if there is arrears payment prior to previous year (other than bonus and directors's fee) pay in current year, for additional remuneration for prior years before year 2009 which is received in the current year, MTD calculation shall be calculated by using Bonus Formula and Schedule of MTD for the relevant year.Scenario 1:
Additional remuneration for 2008 to be paid in year 2009.
Scenario 2:
- Use STD Schedule (Amendment 2004).
- Remuneration in December 2007 will be taken as a basis for computation of STD for Step [A] Bonus Formula.
- Use a separate form when making MTD payment for current month remuneration and additional remuneration.
- Form CP39A for additional remuneration MTD.
- Form CP39 (Pin. 2/05) for current month STD.
Additional remuneration for arrears commissions 2009 to be paid in year 2010.
- Use formula computerised calculation method MTD 2009/ Kalkulator PCB 2009.
- Select MTD computation for 2009.
- Select previously employed in current year.
- Click Month of December.
- Input total of accumulated remuneration/MTD/Rebate/Deduction until before current month for current year (including from previous employer) paid from January until December 2009.
- Please leave the current month remuneration as nil and input arrears commissions as current month remuneration including EPF (if any), click calculate.
- Please use Form CP39A for MTD additional remuneratin payment of arrears commissions.
- Example of calculation
Year 2008, En Ali received arrears salary of RM 1,200 (EPF : RM132.00). His salary in December 2008 is RM3,600 (EPF : 396.00). In January 2010, his salary increase to RM 3,700 (EPF : RM407.00). On the same month, he receives a bonus amounting to RM3,700 (EPF deduction : RM407).COmpute PCB Januari for En. Ali.
- Arrears salary MTD year 2008 (RM1,200)
Computation :MTD Category : CATEGORY 3/KA2
[A] Determine the MTD on monthly remuneration (not including additional remuneration).
[B] (1/12 X Nett Bonus) + Monthly net remuneration
[C] Determine the MTD on [B].
MTD on RM3,295.00 = RM50.00
[D] Determine the MTD on additional remuneration.
(RM50.00 – RM48.00) X 12 = RM24.00
[E] Total amount of MTD to be deducted in the month that arrears salary paid will be
= RM24.00 (use Form CP39A)
- MTD for bonus year 2010.
Please click here to view the detail of 'Kalkulator PCB' calculation.
* Use Form CP 39 for January MTD of RM 292.30.
MTD for Gratuities
Gratuity the following cases are fully exempted and computation for STD is not required:-
- Retirement gratuity
Sum received by way of gratuity on retirement from an employment-
- if the Director General is satisfied that the retirement is due to ill-health;
- if the retirement takes place on or after reaching the age of 55 years, or on reaching the compulsory age of retirement from employment specified under any written law and in either case from an employment which has lasted ten (10) years with the same employer or companies in the same group; or
- if the retirement takes place on reaching the compulsory age of retirement pursuant to a contract of employment or collective agreement at the age of 50 but before 55 and that employment has lasted for ten (10) years with the same employer or with companies in the same group.
- Sum received by way of gratuity or by way of payment in lieu of leave paid out of public funds on retirement from an employment under any written law.
- Sums received by way of gratuity paid out of public funds on termination of a contract of employment (less the employer's contribution to the EPF, if any, and interest thereon).
- Sum received by way of death gratuities or as consolidated compensation for death or injuries.
If an employee is not qualified to any exemption from gratuity as the above, MTD on all gratuities shall be calculated by using Additional Remuneration Formula.
Example :
- Employee commenced employment on: 1 January 2002
- Employee retired and received gratuity on: 29 October 2010
- Total gratuity paid upon retirement at the age of 53: RM35,000.00
Determine period of employment:
Period of employment: 1 January 2002 – 31 October 2010 (9 years 10 months).
Therefore, gratuity is taxable due to period of employment is less than ten (10) years.
Total gratuity received of RM35,000.00 is subject to MTD and the MTD shall be calculated using Additional Remuneration Formula.
Compensation for Loss of Employment
Compensation is exempted from income tax in the following circumstances:
- If the Director General is satisfied that the payment is made on account of loss of employment due to ill-health; or
- In case of a payment made in connection with a period of employment with the same employer or with companies in the same group, in respect of so much of the payment as does not exceed an amount ascertained by multiplying the sum of RM10,000.00 by the number of completed years of service with that employer or those companies.
Compensation for the purpose of this paragraph includes termination under the Voluntary Separation Scheme (VSS) or Mutual Separation Scheme.
Balance of compensation after deducting the qualifying exemption will be subject to MTD and the MTD shall be calculated using Additional Remuneration Formula.
Example:
- Employee commenced employment on 1 May 2004
- Employee is terminated on 25 March 2010
- Total compensation paid RM75,000.00
Determination of amount of compensation which is subject to tax.
[A] Determine the number of completed years of service.
1/5/2004 - 30/4/2005: one completed year of service.
1/5/2005 - 30/4/2006: one completed year of service.
1/5/2006 - 30/4/2007: one completed year of service.
1/5/2007 - 30/4/2008: one completed year of service.
1/5/2008 - 30/4/2009: one completed year of service.
1/5/2009 - 25/3/2010: less than one completed year of service.
Employee has served for 5 completed years of service.
[B] Tax exemption on compensation shall be:RM10,000.00 x 5 completed years of service = RM50,000.00
Compensation paid RM75,000.00
Less: Amount of exemption RM50,000.00
Balance of compensation subject to MTD RM25,000.00
Balance of compensation of RM25,000.00 after deducting the qualifying exemption will be subject to MTD and the MTD shall be calculated using Additional Remuneration Formula.
However, payment for compensation made by a controlled company to a director of the company who is not a whole-time service director shall not be exempted from tax.
MTD for Employee Share Option Scheme (ESOS)
Amount of share benefits is calculated as follows:
| Market value of share at the date option is exercisable | xx |
| Market value at the date option is exercised (whichever is lower) | xx |
| Price paid for the share ( if applicable) | xx |
| Perquisite under paragraph 13(1)(a) Act | xx |
Example :
Date option is offered : 1 December 2007
Date of option is exercisable : 1 March 2008 - 28 February 2018
Date of option is exercised : 2 May 2010
Date of option is exercisable : 1 March 2008 - 28 February 2018
Date of option is exercised : 2 May 2010
Market value per share at the date option is exercisable (1 March 2008) : RM3.80
Market value per share at the date option is exercised (2 May 2010) : RM4.00
Market value per share at the date option is exercised (2 May 2010) : RM4.00
Less:
Offered price per share on
1 December 2007 : RM1.50
Therefore, value of perquisite : RM2.30 (RM3.80 – RM1.50)
Therefore, value of perquisite : RM2.30 (RM3.80 – RM1.50)
If employee being offered and exercised 10,000 unit of shares in the year 2010, the value of perquisite is:
10,000 unit of shares x RM2.30 = RM23,000.00
If the share option exercised by the employee is received in the form of cash and not shares, tax will be imposed on the date the option is exercised.
Employer must ensure MTD for the above perquisite is calculated based on the Additional Remuneration Formula in the month the perquisite is received.
MTD for Commissions
Calculation of MTD for all type of commissions must use additional remuneration MTD formula, nevertheless the commission is received at a fixed amount on each month. (The value of the commission does not need to be equal for every month).
Calculation of MTD for all type of commissions must use additional remuneration MTD formula, nevertheless the commission is received at a fixed amount on each month. (The value of the commission does not need to be equal for every month).
MTD for Employees Working in a Branch outside Malaysia
An employee who is sent by a Malaysian Company to work outside Malaysia will be subject to Malaysian tax if:
- the employee is present in the other country for a period or periods not exceeding in the aggregate 183 days in the calendar year concerned; and
- perform their duties in that country on behalf of the Malaysian Company; and
- the remuneration is borne by a Malaysian Company which has no permanent establishment in that Country.
If the employee fulfills the above mentioned conditions, his remuneration is still subject to tax in Malaysia. Every month, the employer must make a Monthly Tax Deduction for that employee.
Double Tax Agreements can also be referred to determine whether or not the employee is subject to Malaysian tax. If he is not subject to Malaysian tax, no MTD deduction should be made by the employer.
MTD Computation For Bonus and Director's Remuneration
Year 2009 onward, with reference to new Act Para 25 (2A) of Income Tax Act 1967, director’s fee or bonus is receivable in respect of the whole or parts of the relevant period, the fee or bonus when receive in relevant period shall be treated as gross income in the year of receipt.Methods of MTD Payment By Employer
The Inland Revenue Board Of Malaysia offers several mediums of payment for employers to pay the Monthly Tax Deduction (MTD). The employer can make payment through the electronic medium by using Thumdrive, cd or diskette or by using e-payment facility. The employer can also pay manually by using Form CP39 or CP39A.
Payment at IRBM Payment Counter
- Submitting form CP 39 or CP 39A manually.
Payment at IRBM's payment counter can be made by filling in and submitting Form CP39 (amended 1/08) or CP39A(pin.2010). Photostat copies, computer generated forms or Form CP39 other than Form CP39 (amended 1/08) are also acceptable. - Submitting data text file CP 39 or CP 39A through electronic medium together with form 39 or CP39A or confirmation receipt of data text file CP 39 or CP 39A through e-PCB or e-Data PCB.
Payment can only be made manually through electronic medium together with form 39 or CP39A at the Collection Branch payment counters in Kuala Lumpur, Kota Kinabalu and Kuching only.
Payment can only be made by submitting of confirmation receipt of data text file CP 39 or CP 39A through e-PCB or e-Data PCB at electronic medium payment counters at 1st Floor(left wing), Kuala Lumpur Collection Department only.
Payment At Counter Bank Using Diskette
MTD payment can be made at all the branches of CIMB Bank dan Public Bank Berhad (PBB). Format of data text file must comply with format data CP 39 specification by IRBM. Text file must only be save in a diskette for payment purpose.
An employer who is using a diskette for the first time is encourage to send a sample ofdata CP 39 format in diskette for testing together with a hardcopy of the list of MTD deductions. If successful, an approval letter will be issued and if unsuccessful, a rejection letter and report will be issued.
Among the advantages of making payment using a diskette at the counter bank are that the employer can make MTD payments at all CIMB/PBB branches in Malaysia, the employer need not send the payment, report and diskette to the Collections Branch in Kuala Lumpur and it enables the employer to easily make payment within the stipulated time.
An employer who is using a diskette for the first time is encourage to send a sample ofdata CP 39 format in diskette for testing together with a hardcopy of the list of MTD deductions. If successful, an approval letter will be issued and if unsuccessful, a rejection letter and report will be issued.
Among the advantages of making payment using a diskette at the counter bank are that the employer can make MTD payments at all CIMB/PBB branches in Malaysia, the employer need not send the payment, report and diskette to the Collections Branch in Kuala Lumpur and it enables the employer to easily make payment within the stipulated time.
Steps to follow when making MTD payment at the counter bank:
- The employer brings the diskette and cheque to the bank.
- Fills in Scheduler Tax Deduction Payment Slip.
- Takes the diskette for testing to the diskette testing counter.
- If successful, the employer takes the bank slip, diskette and cheque to the payment counter. A copy of the payment slip is given to the employer once payment is accepted by the bank.
- Employer shall keep copy of bank deposit slip for MTD payments deem as officer receipt.
MTD Payment
MTD Payment Through Internet
MTD payment can be made either through FPX (members of FPX) medium or direct log on to respective bank internet banking.
- Alliance Bank
- CIMB Bank
- Maybank
- Public Bank Berhad
- RHB Bank Berhad
- OCBC Bank
- Ambank Berhad
- Citibank Berhad
- HSBC Bank Berhad
- Hong Leong Bank Berhad
- Bank Islam Malaysia Berhad
- CIMB Bank (Akaun B2B sahaja)
- Hong Leong Bank Berhad
- Maybank2e / Maybank2U
- Public Bank Berhad
Penalty for Late Remittance of MTD
An employer who fails to remit payment on or before the 10th of the following month can be fined. The minimum fine is RM200 and not more than RM2000 or 6 months imprisonment or both.
An employer who does not deduct MTD or deducts but fails to remit the MTD to IRBM can be prosecuted in a civil court. With this, the MTD not deducted becomes a debt to the Government.
MTD Payment for Non Resident Employee
MTD of an employee who is not resident or not known to be resident in Malaysia shall be calculated at the rate of 26% of his remuneration for year 2010.
Example :
Employee is not resident in calendar year 2010.
Example :
Employee is not resident in calendar year 2010.
Total monthly remuneration : RM3,000.00
MTD calculation : RM3,000.00 x 26%
Total MTD : RM780.00
MTD calculation : RM3,000.00 x 26%
Total MTD : RM780.00
Request for Copy of Receipt
Employers who have made MTD payment at the IRBM payment counter but have lost the original receipt can request for a copy of the receipt from the IRBM payment counter in Jalan Duta.
Issues Relating To Employees
Yearly Remuneration Statement (EA/EC Form)
Refer to Section 83(1A), Income Tax Act 1967, with effect from year of assessment 2009, every employer shall, for each year, prepare and render to his employee statement of remuneration of that employee on or before the last day of February in the year immediately following the first mentioned year.
Forms to be used:
Forms to be used:
- 'EA' - Remuneration Statement for Private Employees.
- 'EC' - Remuneration Statement for Government Employees.
The above mentioned form will be attached together with Form E which is posted to you. In case if you do not receive it, Form EA/EC can be downloaded here.
Form EA or EC is not required to be sent to IRBM.
Notification of New Employee
The employer must notify the nearest assessment branch within one month from the date of commencement of employment of an individual who is subject to or may subject to income tax using Form CP22.
Failure to notify IRBM will render an employer liable to prosecution and on conviction, liable to a fine of not less than RM200 and not more than RM2,000 or to imprisonment for a term not exceeding six months or to both.
The employer also be responsible for any tax due from the above mentioned employee.
The employer also be responsible for any tax due from the above mentioned employee.
Retire or Cease From Employment
The employer is responsible for notifying IRBM at least thirty days before the date the employee ceases employment if:
- Employee is about to retire.
- Employee is subject to MTD scheme and the employer has not made any deduction.
- Employee is about to leave Malaysia permanently.
The employer must withhold money payable to the employee until they receive a Clearance Letter from the Assessment Branch.
However, the employer is not required to send notification about the employee ceasing employment or withhold money payable to him if:
However, the employer is not required to send notification about the employee ceasing employment or withhold money payable to him if:
- Employee is subject to MTD and deduction has been made by the employer.
- Employee's remuneration is less than the minimum income subject to MTD.
- Employer is aware that the employee is to be employed elsewhere in Malaysia.
Form used:
- CP22A - Notification of cessation of employment (Employment of Private Sector Employees)
- CP22B - Notification of cessation of employment (Employment of Public Sector Employees)
Failure to notify IRBM will render an employer liable to prosecution and on conviction, liable to a fine of not less than RM200 and not more than RM2,000 or to imprisonment for a term not exceeding six months or to both.
The employer will also be responsible for any tax due from the above mentioned employee.
The MTD amount is ascertained based on the following criteria:
Employee’s Residence Status
The residence status of an individual is determined under section 7 of the Act. Public servant or officer of a statutory authority who are nonresident by virtue of:
- exercising his employment outside Malaysia; or
- attending any course of study in any institution or professional body outside Malaysia which is fully-sponsored by the employer,
is deemed to be a resident for the basis year for that particular year of assessment and for any subsequent basis years when he is not in Malaysia.
Income from sources outside Malaysia received by persons in (a) or (b) above is exempted from income tax in Malaysia according to the Act.
- Non Resident Employee
MTD of an employee who is not resident or not known to be resident in Malaysia shall be calculated at the rate of 26% of his remuneration.
Example :
Employee is not resident in calendar year 2010.
Total monthly remuneration : RM3,000.00
MTD calculation : RM3,000.00 x 26% Total MTD : RM780.00 - Resident Employee
MTD of an employee who is resident or known to be resident in Malaysia is derived after deducting all allowable deductions under the Act.
Amendment on Monthly MTD
An employee can request his employer to increase his existing MTD deduction without getting approval from IRBM if the deduction made is not sufficient to cover the actual tax payable.
Employee Not Eligible for MTD but Liable to Tax
An employee whose monthly remuneration after EPF deduction is below RM2,451 may be liable to income tax even though his remuneration is not subject to tax deduction under the MTD.
It is the responsibility of the employer to inform the nearest IRBM office to have a file registered for that employee by filling up form CP22. The form can be downloaded here.
It is the responsibility of the employer to inform the nearest IRBM office to have a file registered for that employee by filling up form CP22. The form can be downloaded here.
The employee is also responsible to register an income tax file if his employer fails to do so.
Beginning from the year of assessment 2009, director fees or bonus relating to a year which is received in any current year, that remuneration becomes part of remuneration in the current year it is received. Use Form CP39 only (Pin. 2/05) for current month MTD payment.
For additional remuneration (other than bonus and director’s fee) for prior years before year 2009 which is received in the current year, MTD calculation shall be calculated by using Bonus Formula and Schedule of Monthly Tax Deduction for the relevant year.
For additional remuneration (other than bonus and director’s fee) for prior years before year 2009 which is received in the current year, MTD calculation shall be calculated by using Bonus Formula and Schedule of Monthly Tax Deduction for the relevant year.
Example 1:
Additional remuneration of arrears commission for 2008 to be paid in year 2009.
- Use STD Schedule (Amendment 2004).
- Remuneration in December 2008 will be taken as a basis for computation of MTD for Step [A] Bonus Formula.
- Use a separate form when making MTD payment for current month remuneration and additional remuneration.
- Form CP39A for additional remuneration MTD.
- Form CP39 for current month MTD.
Example 2:
Additional remuneration of arrears commission for 2009 to be paid in year 2010.
Additional remuneration of arrears commission for 2009 to be paid in year 2010.
- Use formula computerised calculation method MTD 2009/’Kalkulator 2009’.
- Click MTD calculation year 2009.
- Select previously employed in current year.
- Click Month of December.
- Accumulated remuneration/MTD/Rebate/Deduction until before current month for current year (including from previous employer)
- Do not input the current remuneration and just key in amount of arrears received as additional remuneration as well as EPF (if any). Clicks calculate.
- Use Form CP39A to pay MTD for additional remuneration(arrears commissions).
If additional remuneration for the year 2009 is paid in the current year, the MTD calculation is as follows;
- Schedule of Monthly Tax Deduction for year 2009
The MTD calculation for Step 1 in the Additional Remuneration Formula shall be based on the normal remuneration for the month of December or last month of employment for the year by using the Schedule of Monthly Tax Deductions applicable for that year.
- Computerised Calculation Method
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