Being an employer is not
an easy job. On top of the daily ins and outs of running a business, employers also have a whole list of statutory requirements to fulfil. The Income Tax Act (ITA) 1967 places an obligation on employers to fill out a list of forms, and failure to do so can result in dire consequences.
Section (s.) 120(1) of the ITA 1967 clearly lays out the penalties that may apply if an employer fails to comply with statutory requirements. When an employer fails to submit a form or make the necessary deductions from an employee’s income, they may be fined RM200 to RM20,000, be imprisoned for up to 6 months, or both.
Overview of Employer’s Statutory Requirement
The following is the list of forms that an employer has to submit to the Malaysian Inland Revenue Board (HASiL), which we will abbreviate as IRBM hereinafter:
- Form CP22
- Form CP22A/CP21
- Form CP39
- Form TP1/TP3
- Form EA
- Form E
Form CP22
When your company takes in a new employee, you have to notify the IRBM
via Form CP22 within 30 days from the date of commencement of employment.
Form CP22A
In the event of cessation of employment, Form CP22A should be submitted to the IRBM not later than 30 days prior to the cessation of employment.
Do note that Form CP22A is not applicable if the employee is not retiring from employment. In other words, this form is not applicable if the employee is subject to a monthly tax deduction (MTD) and deduction has been made or if they have a remuneration less than minimum income subject to MTD.
In the event of resignation, retirement, or death, then Form CP22A must be submitted, and the employer should withhold the money payable to that employee until they receive a Clearance Letter from the employee’s assessment branch.
Form CP21
If your employee ceases to be under your employment and will be leaving Malaysia for more than 3 months, then you
will need to submit Form CP21 to that employee’s assessment branch not later than 30 days prior to the employment cessation.
Form CP39
Form CP39 is the MTD (potongan cukai bulanan or PCB in Bahasa Malaysia) statement that has to be submitted by the employer to the IRBM every month.
An employer using the computerised calculation method such as Calculator PCB, e-PCB, computerised payroll system, or an in-house/ customised payroll system that has been verified by IRBM shall compute MTD based on gross taxable remuneration less total monthly EPF contribution (inclusive EPF for non-taxable remuneration/allowance) limited to RM4,000.
The employer will need to deduct the MTD from the remuneration of an employee in each month or the relevant month in accordance with the Schedule of Monthly Tax Deductions or Computerised Calculation Method and pay it to the Director General not later than the 15th day of every
calendar month.