RW E-BULLETIN

200three ( MAY - AUGUST 2022 )

HIGHLIGHTS :

HUMAN RESOURCE MANAGEMENT

Changes on Employment Act 1955 (postponed to 1
January 2023)

TAXATION
Technical guideline updates, withholding tax and
other updates

COMPANY SECRETARY
Notification of changes in the business address
(including branches) and/or nature of business

BRIDGING YOUR BUSINESS

RWWILLIAM @RW-WILLIAM WWW.RWWILLIAM.COM

 RICHARD WILLIAM
FOUNDER AND LEAD
PARTNER
With over 30 years of extensive
experience in secretarial, audit,
accounting, taxation and
corporate advisory, Richard has
advised local and international
clients across a broad range of
industries – including financial
services, consumer products,
industrial products, real estate,
and oil and gas amongst others.
DR. SHASHI KUMAR
KANESAN
ACCOUNTANT BY
PROFESSION
Dr Shashi Kumar Kanesan is an Approved
Company Auditor and Approved Tax Agent.
He has over 20 years of experience serving
clients of various industries in the engagement
related to accounting, auditing, taxation and
corporate finance advisory. Being an
Approved HRDF trainer. Dr Shashi conducts
training and seminar in accounting and
financial management related area over the
past several years.
Dr Shashi holds a Bachelor in Accountancy
and MBA (Finance) from University Putra
Malaysia and a PhD in Finance from University
of Malaya. He is member of the Malaysian
Institute of Accountants (MIA) and the
Chartered Tax Institute of Malaysia (CTIM).
 CONTENTS
Introduction 1
Changes on Employment Act 1955 (postponed to 1
2 - 15
January 2023)
Conclusion 16

Tax treatment on secretary & tax fee updates 17 - 18

(YA2022)
Withholding tax 19 - 22
Withholding tax (WHT) 2% on payment made to
23 - 24
authorised agents, dealers or distributors
Offence, fines and penalties 25 - 28
Method of payments 29 - 34
Tax relief 2022 35
EPF rate & minimum wage 36

Notification of changes in the business address 37

(including branches) and/or nature of business
Contact us at
KLANG
PETALING JAYA
Suite A, No.21A, 1st Floor Jalan Bayu
No. 9-3A, Mayang Plaza, Jalan SS 26/4
Tinggi 7
Taman Mayang Jaya, 47301 Petaling Jaya
Taman Bayu Tinggi, 41200 Klang
Selangor Darul Ehsan.
Selangor Darul Ehsan.

+603-7805 3859
+603-3324 7062
Fax: +603-7805 3871
Fax: +603-3324 7063
richard@rwwilliam.com.my
auditklang@rwwilliam.com.my
KUALA LUMPUR
IPOH JOHOR BAHRU

148-2, Jalan Tun Sambanthan

No.52A, Jalan Medan Ipoh 1E 39-A, Jalan Sagu 15, Taman Daya
50470 Kuala Lumpur
Medan Ipoh Bistari 81100 Johor Bahru, Johor Darul Takzim.
Wilayah Perseketuan.
31400 Ipoh
+607 – 710 2181
+603 - 2274 1911
+605-541 5115 rwwilliam.jb@gmail.com
Fax: +603 – 2272 2180
jassen@rwwilliam.com.my
lam@rwwilliam.com.my

SEREMBAN SEREMBAN PENANG

323-1A, Jalan Haruan 5/7
Pusat Komersial Oakland II
70300 Seremban
+606-851 2020
shashi@rwwilliam.com.my
265-B-1, Taman AST Jalan Sg. Ujong
70200 Seremban, Negeri Sembilan.
+6012-305 9116
auditns@rwwilliam.com.my
Address: 1311-B, 1st Floor,
Jalan Baru, Taman Chai Leng,
13700 Perai, Penang
+604-399 9203
kugan@rwwilliam.com.my
 HUMAN RESOURCE MANAGEMENT

INTRODUCTION

During a recent press conference on 26th August 2022, Datuk Seri M Saravanan, Minister of Human
Resources announced that the execution of Employment Act 1955 amendments will be postponed to 1
January 2023.

The amendments initially were scheduled to take effect from 1 September 2022. The following is a
few key points of the amendments:

Female employees will be entitled to 98 days of maternity leave, increased from the previous 60
days maternity leave.

Married male employees will now be entitled to 7 consecutive days of paternity leave, restricted
up to 5 confinements irrespective of the number of spouses. He also needs to be employed by
the same employer at least 12 months immediately before commencement of such paternity
leave.

Hospitalisation leave will no longer be deducted after sick leave has been applied as it has been
separated out.

Weekly working hours to be reduced from 48 hours to 45 hours

 HUMAN RESOURCE MANAGEMENT
CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)
1. CHANGE IN MAXIMUM WORKING HOURS FOR WORKERS
CURRENT
Basic hours of 48 hours per week
2. MATERNITY LEAVE
CURRENT
60 days
(aa) Where a female employee is entitled to
maternity leave under subparagraph (a)(i) but is
not entitled to receive maternity allowance from
her employer for the eligible period under
paragraph (c), or because she has not fulfilled
the conditions set out in paragraph (2)(a), she
may, with the consent of the employer,
commence work at any time during the eligible
period if she has been certified fit to resume
work by a registered medical practitioner.
NEW
Basic hours reduce to 45 hours per week
NEW
98 days
(aa) Where a female employee is entitled to
maternity leave under subparagraph (a)(i),
whether or not she is entitled to receive
maternity allowance from her employer for the
eligible period under paragraph (c), or whether
or not she has fulfilled the conditions set out in
paragraph (2)(a), she may, with the consent of
her employer, commence work at any time
during the eligible period if she has been
certified fit to resume work by a registered
medical practitioner.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

3. RESTRICTION ON TERMINATION OF PREGNANT FEMALE EMPLOYEE (NEW

SECTION 41A)

CURRENT NEW

Not available (1) Where a female employee is pregnant or

is suffering from an illness arising out of her
pregnancy, it shall be an offence for her
employer to terminate her services or give
her notice of termination of service, except
on the grounds of -
(a) wilful breach of a condition of the contract
of service under subsection 13(2);
(b) misconduct under subsection 14(1); or
(c) closure of the employer ’s business.

(2) Where the service of a female employee

under subsection (1) is terminated, the
burden of proving that such termination is
not on the ground of her pregnancy or on the
ground of illness arising out of her
pregnancy, shall rest on the employer.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

4. SICK LEAVE

CURRENT NEW

Sick leave (Not hospitalisation) Sick leave (Not hospitalisation)

Below 2 years – 14 days Below 2 years – 14 days
2 years to 5 years – 18 days 2 years to 5 years – 18 days
Above 5 years – 22 days Above 5 years – 22 days

Hospitalisation – 60 days Hospitalisation – 60 days

Provided that the total number of days of First proviso deleted, therefore leave
paid sick leave in a calendar year which an entitlements paid sick days increase from 60
employee is entitled to under this section days a year to 74 days to 82 days per year
shall be sixty days (60) in the aggregate depending on the period service.

5. PATERNITY LEAVE (NEW SECTION 60FA)

CURRENT NEW

Not available Seven (7) consecutive days in respect of

each confinement.

Restricted to five confinements irrespective

of the number of spouses.

A married male employee shall be entitled to

paternity leave from his employer if—
(a) Has been employed by the same
employer at least twelve months immediately
before the commencement of such paternity
leave; and
(b) he has notified his employer of the
pregnancy of his spouse at least thirty days
from the expected confinement or as early as
possible after the birth.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

6. PAYMENT OF WAGES

CURRENT NEW

Wages are to be paid to employee’s account
via bank. With payment through cash or
cheque, to have prior written agreement
between the employee and employer and
approval by the Director General of Labour
Department.
For domestic workers, wages payment is to
be paid by cash or cheque only allowed
at the request of the employee to the
employer
and permission of the Director General of
Labour Department.
The substituting the term “Bank” to
“Financial Institution”. The term ‘Financial
Institution” include those designated under
the Financial Service Act 2013.
All payment of wages is to be made via bank
transfer. With payment via cash or cheque,
must be approved by the Director General
with a written agreement between the
employee and employer.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

7. CALCULATION OF WAGES FOR INCOMPLETE MONTH’S WORK (NEW

SECTION 18A)
NE
CURRENT NEW

Not available Notwithstanding section 60i, an employee

who is employed on a monthly rate of pay
and has not completed a whole
month of service-
(a) where he commenced employment after
the first day of the month;
(b) where his employment was terminated
before the end of the month;
(c) where he took leave of absence without
pay for one or more days of the month; or
(d) where he took leave of absence by reason
of having been called up for national service
under the National Service Act 1952 [Act
425], to present himself for national service
training as required under the National
Service Training Act 2003 [Act 628] or to
comply with any other written law relating to
national service, shall be paid wages due to
him for that month calculated according to
the following formula:
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

8. FLEXIBLE WORKING ARRANGEMENT (NEW SECTION 60P)

NE
CURRENT NEW

Not available Section 60P,

(1) Subject to Part XII or anything contained
in the contract of service, an employee may
apply to an employer for a flexible working
arrangement to vary the hours of work, days
of work or place of work in relation to his
employment.
(2) Where there is a collective agreement,
any application made by the employee under
subsection (1) shall be consistent with the
terms and conditions in the collective
agreement.

Application for flexible working arrangement

60Q,
(1) The employee shall make an application
for flexible working arrangement under
section 60P in writing and in the form and
manner as may be determined by the
Director General.
(2) Upon the application made under
subsection (1), an employer shall, within sixty
days from the date such application is
received, approve or refuse the application.
(3) The employer shall inform the employee
in writing of the employer ’s approval or
refusal of the application under subsection
(1) and in the case of a refusal, the employer
shall state the ground of such refusal.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

9. EMPLOYMENT OF FOREIGN EMPLOYEES

CURRENT NEW
NE
Section 60K – Duty to furnish information and Employment of foreign employee 60k.
returns (1) No employer shall employ a foreign employee
unless prior approval has been obtained from the
DG.

(2) An application for the approval under

subsection (1) shall be made in the form and
manner as may be determined by the Director
General.

(3) Upon approval of the Director General under this

section, an employer shall, within fourteen days
from the date of the employment of a foreign
employee, furnish the Director General with the
particulars relating to the foreign employee in such
manner as the Director General may direct.

(4) The Director General may, subject to any written

law, approve an application under this section if the
employer complies with the following conditions:

(a) the employer satisfies the Director General that

on the date on which he makes the application
(i) he has no outstanding matter relating to any
decision, order or directive issued under this Act; or
(ii) he has no outstanding matter or case relating to
any conviction for any offence under this Act, the
Employees’ Social Security Act1969 [Act 4], the
Employees’ Minimum Standards of Housing,
Accommodations and Amenities Act 1990 [Act 446]
or the National Wages Consultative Council Act
2011 [Act 732]; or

(b) the employer has not been convicted of any

offence under any written law in
relation to anti-trafficking in persons and forced
labour.

(5) An employer who contravenes subsection (1)

commits an offence and shall, on conviction, be
liable to a fine not exceeding one hundred thousand
ringgit or to imprisonment for a term not exceeding
five years or to both.

8
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

10. DISCRIMINATION IN EMPLOYMENT (NEW SECTION 69F)

CURRENT NEW
NE
Section 60K – Duty to furnish information and (1) The Director General may inquire into and
returns decide any dispute between an employee
and his employer in respect of any matter
relating to discrimination in employment, and
the Director General may, pursuant to such
decision, make an order.

(1) An employer who fails to comply with any

order of the Director General issued under
subsection (1) commits an offence and shall,
on conviction, be liable to a fine not
exceeding fifty thousand ringgit; and shall
also, in the case of a continuing offence, be
liable to a daily fine not exceeding one
thousand ringgit for each day the offence
continues after conviction.

11. FORCED LABOUR (NEW SECTION 90B)

CURRENT NEW

Not available Any employer who threatens, deceives or

forces an employee to do any activity, service
or work and prevents that employee from
proceeding beyond the place or area where
such activity, service or work is done,
commits an offence and shall, on conviction,
be liable to a fine not exceeding one hundred
thousand ringgit or to imprisonment for a
term not exceeding two years or to both.
 HUMAN RESOURCE MANAGEMENT
CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)
12. CONTRACTOR FOR LABOUR
CURRENT
Information relating to supply of employees
(1) A contractor for labour who intends to
supply or undertakes to supply any
employee shall register with the Director-
General in the prescribed form within
fourteen days before supplying the
employee.
(2) If a contractor for labour referred to in
subsection (1) supplies any employee, he
shall keep or maintain one or more registers
containing information regarding each
employee supplied by him and shall make
such registers available for inspection.
(3) A contractor for labour who-
(a) supplies his employee without registering
with the Director-General as required under
subsection (1); or
(b) fails to keep or maintain any register, or
make available any register for inspection as
required under subsection (2), commits an
offence and shall, on conviction, be liable to a
fine not exceeding ten thousand ringgit.
NEW
NE
Information relating to supply of employees
(1) A contractor for labour who intends to
supply or undertakes to supply any
employee shall register with the Director
General in the prescribed form within
fourteen days before supplying the
employee.
(2) If a contractor for labour referred to in
subsection (1) supplies any employee, he
shall keep or maintain one or more registers
containing information regarding each
employee supplied by him and shall make
such registers available for inspection.
(3) A contractor for labour who-
(a) supplies his employee without registering
with the Director General as required under
subsection (1);
(b) “(aa) fails to make such contract or any
other document relating to such contract
available for inspection as required under
subsection (1a); or ”; and
(c) fails to keep or maintain any register, or
make available any register for inspection as
required under subsection (2), commits an
offence and shall, on conviction, be liable to a
fine not exceeding fifty thousand ringgit.
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

13. PRESUMPTION AS TO WHO IS AN EMPLOYEE AND EMPLOYER (NEW

SECTION 101C)

CURRENT NE
NEW

Not available Presumption as to who is an employee and

employer

(1) In any proceeding for an offence under this Act,

in the absence of a written contract of service
relating to any category of employee under the First
Schedule, it shall be presumed until the contrary is
proved that a person is an employee-
(a) where his manner of work is subject to the
control or direction of another person;
(b) where his hours of work are subject to the
control or direction of another person;
(c) where he is provided with tools, materials or
equipment by another person to execute work;
(d) where his work constitutes an integral part of
another person’s business;
(e) where his work is performed solely for the
benefit of another person; or
(f) where payment is made to him in return for work
done by him at regular intervals and such payment
constitutes the majority of his income.
(2) For the purpose of subsection (1), it shall be
presumed until the contrary is proved that a person
is an employer—
(a) where he controls or directs the manner of work
of another person;
(b) where he controls or directs the hours of work of
another person;
(c) where he provides tools, materials or
equipment’s to another person to execute work;
(d) where the work of another person constitutes an
integral part of his business;
(e) where another person performs work solely for
his benefit; or
(f) whether or not payment is made by him in return
for work done for him by another person.
(3) The first-mentioned person in subsection (2)
includes the agent, manager or factor of such first
mentioned person.

11
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

14. COURT ORDER FOR PAYMENTS DUE TO EMPLOYEE (NEW SECTION 87A)

CURRENT NE
NEW

Not available Court order for payments due to employee

(1) Where an employer has been convicted of

an offence relating to the payment of wages
or any other payments payable to an
employee under this Act, the court before
which he is convicted may order the
employer to pay any payment due to the
employee in relation to that offence.
(2) Where an employer fails to comply with
an order made under subsection (1), the
court shall, on the application of the
employee, issue a warrant to levy the
employer ’s property for any payments due
under that subsection in the following
manner:
(a) by way of distress and sale of employer ’s
property in accordance with the same
procedure of execution under the Rules of
Court 2012 [P.U. (A) 205/2012] and this
execution shall apply mutatis mutandis
notwithstanding the amount in the order; or
(b) in the same manner as a fine as provided
under section 283 of the Criminal Procedure
Code [Act 593] mutatis mutandis means
“once the necessary changes have been
made”

12
 HUMAN RESOURCE MANAGEMENT
CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)
15. APPEALS
CURRENT
Any person affected by any decision or order,
other than an order or decision under section
69, 69B, 69C, 73 or subsection 81D(4), given
or made by an officer appointed under
subsection 3(2), may, if he is dissatisfied with
such decision or order, within fourteen days
of such decision or order being
communicated to him appeal in writing
therefrom to the Director-General.
16. APPRENTICESHIP CONTRACT
CURRENT
Shall not be less than two years in the course
of which the apprentice is bound to work in
the employer ’s service
17. GENERAL PENALTY
CURRENT
Any person who commits any offence under,
or contravenes any provision of, this Act, or
any regulations, order, or other subsidiary
legislation whatsoever made thereunder, in
respect of which no penalty is provided, shall
be liable, on conviction, to a fine not
exceeding ten thousand ringgit
NEW
NE
Any person affected by any decision or order,
other than an order or decision under section
69 or 73 or subsection 81D(4), given or made
by an officer appointed under subsection
3(2), may, if he is dissatisfied with such
decision or order, within twenty-one days of
such decision or order being communicated
to him appeal in writing therefrom to the
Director-General.
NEW
Shall be for a minimum period of six months
and a maximum period of twenty-four
months
NEW
Any person who commits any offence under,
or contravenes any provision of, this Act, or
any regulations, order, or other subsidiary
legislation whatsoever made thereunder, in
respect of which no penalty is provided, shall
be liable, on conviction, to a fine not
exceeding fifty thousand ringgit
13
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

18. SEXUAL HARASSMENT (SECTION 81H)

CURRENT NEW
NE
There is no need to post a notice to raise An employer shall, at all times, exhibit
awareness on sexual harassment. conspicuously at the place of employment, a
notice to raise awareness on sexual
harassment.

19. EMPLOYMENT OF WOMEN

CURRENT NEW

Section 34 : Prohibition of night work Deleted

Section 35 : Prohibition of underground work Deleted
Section 36: Prohibition of employment by Deleted
Minister

20. DEFINITION CHANGES

CURRENT NEW

Domestic servant Domestic employee

Foreign domestic servant Foreign domestic employee

**Reference: Malaysia Federal Legislation (agc.gov.my)

14
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

21. AMENDMENT OF THE FIRST SCHEDULE

NE
(Amendment of the First Schedule by Ministerial Order under section 2(2) of Act 265)

To extend protection to all private sector workers regardless of wage amount or type of
employment. Any employees earning up to RM 4000 per month is ELIGIBLE for overtime
pay, work on rest days, work on public holidays, shift allowance and termination benefits.
However, for employees who earn more than RM4000 per month are NOT eligible for
overtime pay, work on rest days, work on public holidays, shift allowance and termination
benefits.

The First Schedule also maintains its protection for manual workers, artisans and
apprentices.

SOCSO HAS INCREASED THE MAXIMUM WAGES CEILING FROM RM4,000 TO

RM5,000

Prior to 1st September 2022, Under Act 4 of Social Security Act, the maximum wages at
RM4000; whereby all contribution of RM4000 an above is contributing at a maximum of
RM19.75 and RM69.05 for employee and employer deduction.

With effective from 1st September 2022, the wages ceiling is now capped at RM5000. This
will change the maximum contribution to RM 24.75 (employee) and RM 86.65 (employer)
for all contribution of RM5000 and above.

This changes on the wages ceiling will also affect the Act 800 for EIS with an increment in
the contribution from RM 7.90 to a maximum of RM 9.90 for both employee and employer
deduction.

**Reference: https://www.perkeso.gov.my/kadar-caruman.html

15
 HUMAN RESOURCE MANAGEMENT

CHANGES ON EMPLOYMENT ACT 1955 (POSTPONED TO 1 JANUARY 2023)

CONCLUSION NE

The amended Employment Act 1955 now offers protection to a much larger category of employees
irrespective of wages or occupation in Malaysia. Employers should note that since the effective date
of the amended Employment Act 1955 is fast approaching, they should review and revise their
employees’ employment contracts and policies to ensure compliance. Employers are also urged to
take the necessary steps to comply with the amended Act and to notify the changes to their
employees.

16
TAXATION

TAX TREATMENT ON SECRETARY & TAX FEE

UPDATES (YA 2022)

Secretarial fees and tax filing fees are expenses that must be borne by
taxpayers in order to comply with legal requirements in doing business. These
two fees are not deducted in the calculation of income tax because they do
not contribute directly to the production of business income.

Effective year of assessment 2015, a secretarial fee of up to RM5,000.00

charged by a company secretary registered under the Companies Act 1965
(CA 1965) to comply with the statutory requirements under CA 1965, as well
as a total amount of tax filing fee of up to RM10,000.00 charged by a tax
agent approved under the ITA or the GST Act 2014, incurred and paid by a
person in the basis period for a year of assessment, is allowable as a
deduction.

The provision for deduction of secretarial fee and tax filing fee is under the
Income Tax Rules (Deduction for Expenses in relation to Secretarial Fees and
Tax Filing Fee) Rules 2014 [P.U.(A) 336/2014].

To provide further flexibility to taxpayers, Budget 2020 proposed combining

the tax deduction limit for secretarial and tax filing fees, allowing a total
deduction of up to RM15,000.00 each YA beginning in YA 2020.
The Rules 2020 [P.U.(A) 162/2020] allow a resident person who has incurred
and paid the following fees in the basis period for that YA to claim a
RM15,000.00 deductions.

Effective from YA 2022, tax deduction for expenses related to secretarial

fees and tax filing has been amended (Deduction for Expenses in relation to
Secretarial Fees and Tax Filing Fees) (Amendment) Rules 2021 [P.U.(A)
471/2021], which explains that expenses related to secretarial fees and tax
filing fees are eligible for deduction if incurred despite the expense not yet
pay by the person in the basis period for that YA.

However, IRB has restricted the unpaid fee incurred prior to YA 2019
although payment made from 01st January 2022 onwards.

17
TAXATION

TAX TREATMENT ON SECRETARY & TAX FEE

UPDATES (YA 2022)

The following table is the summary regarding the deduction for expenses in relation to
secretarial fees and tax filing fee.

18
TAXATION

WITHHOLDING TAX

Withholding tax is an amount withheld by the party making payment (payer) on income earned by a
non-resident (payee) for the services performed in Malaysia and paid to the Inland Revenue Board of
Malaysia.

'Payer' refers to an individual/body other than individual carrying on a business in Malaysia. He is

required to withhold tax on payments for services rendered/technical advice/rental or other payments
made under any agreement for the use of any moveable property and paid to a non-resident payee.
'Payee' refers to a non-resident individual/body other than individual in Malaysia who receives the
above payments.

According to Income Tax Act 1967, a “payer” who owes money to a non-resident individual (apart
from the income of non-resident public entertainers) is shall deduct withholding tax at the prescribed
rate (shown as per table below) from such payment and (whether such tax has been deducted or not)
pay that tax to the Director General of Inland Revenue within one month after such payment has been
paid or credited to the NR payee.

Payers are urged to always make sure the deduction must be made with the relevant documents
below:

i. Payment form with complete information

ii. A copy of invoices issued by the NR payee
iii. A copy of payment documents as proof of date of payment /crediting to the NR payee

While payees should check on the deducted amount to prevent any calculation error, payment issue,
or non-compliance.

19
 TAXATION
WITHHOLDING TAX
The following is a list of payment types and the applicable withholding tax deduction.

Withholding
Payment Type Income Tax Act 1967 Payment Form
Tax Rate

Section 107A (1) (a) &

Contract Payment 10%, 3% CP 37A
107A (1) (b)

Interest Section 109 15% CP 37

Royalty Section 109 10% CP 37

Special classes of income:

Technical fees, payment for
Section 109B 10% CP 37D
services, rent/payment for use of
moveable property

Interest (except exempt interest)

paid by approved financial Section 109C 5% CP 37C
institutions

Payment memo
Income of non-resident public issued by
Section 109A 15%
entertainers Assessment
Branch

Real Estate Investment Trust

.
(REIT)
10%
i.Other than a resident company
Section 109D 24% CP 37E
ii. Non-resident company
10%
iii. Foreign investment institution
effective from 01/01/2007

Family Fund/Takaful Family

Fund/Dana Am
Section 109E 8% CP 37E(T)
i. Individual and other
25%
ii. Non-resident Company

Income under Section 4(f) ITA 1967 Section 109F 10% CP 37F

20
 TAXATION

WITHHOLDING TAX

ROYALTY PAID TO NON-RESIDENT PERSONS (PAYEE)

Royalty is defined as any sums paid as consideration for the use of or the right to use:

1. Copyrights, artistic or scientific works, patents, designs or models, plans, secret processes
or formulae, trademarks or tapes for radio or television broadcasting, motion picture films, films
or video tapes or other means of reproduction where such films or tapes have been or are to be
used or reproduced in Malaysia or other like property or rights.

2. Know-how or information concerning technical, industrial, commercial or scientific

knowledge, experience or skill.

3. Income derived from the alienation of any property, know-how or information mentioned in
above paragraph of this definition.

Effective from 17th January 2017, the scope of royalty has been expanded following the
amendment to the definition in Section 2(1) of the Income Tax Act 1967. Thus, royalty has
included the following:

the use of, or right to use software (see below for the exemption effective 1 March 2019)
the receipt of, or the right to receive visual images or sounds transmitted to the public by
satellite or cable, fibre optic or similar technology
the use of, or the right to use visual images and/or sound in connection with broadcasting
by
satellite or cable, fibre optic or similar technology
the use of, or the right to use some or all of licensed radio frequency spectrums
the total, or partial forbearance in respect of the use of, or rights covered by the royalty
definition.

21
 TAXATION

WITHHOLDING TAX
ROYALTY PAID TO NON-RESIDENT PERSONS (PAYEE)

Broadly, payments for the following would constitute royalty payments:

1. Consideration for the use of, or the right to use, any copyright, patent design or model, plan, secret
formula or process, trademark or like property or rights
2. income from the alienation of property or information mentioned in (a) above
3. the use of, or the right to use, any industrial, commercial or scientific equipment
4. the supply of scientific, technical, industrial or commercial knowledge or information
5. the rendering of assistance or service in connection with the application or use of property mentioned in
(a) and (c) above and such knowledge or information as mentioned in (d) above
6. The use of, or the right to use, motion picture films, television films, video tapes and radio broadcasting
tapes
7. Consideration for total or partial restraint in respect of use or a right to use of an asset of the kind
mentioned in (c), (d), (e) and (f) above
8. Consideration for the operation of mines, quarries or others of extraction of natural resources, and
9. Consideration for the rights to extract timber or other forest produce.

For payments to a non-resident in relation to digital advertising, where such payments are for the purchase
or use of an application (ie Apps) that allows the payer to create their own advertisement campaign; the
payment is a royalty income and withholding tax under Section 109.

From 1 March 2019, the Income Tax (Exemption)(No 4) Order 2019 exempts from tax the payment for shrink-
wrapped software, site license, downloadable software or software bundled with personal computer
hardware, smartphone or tablet to a non-resident person by a resident end user who purchased the
software for personal usage.

Where the Malaysian payer is required to reimburse out-of-pocket expenses of the non-resident, these may,
in certain situations be subject to withholding tax.

According to the Double Taxation Agreement between Malaysia and the country where the non-resident
payee is tax resident, 10% or any other rate may be withheld from the gross amount of royalty paid to non-
resident payees. It is the final tax.

The following conditions must be met for a royalty to be considered derived from Malaysia:
The Government or a State Government is responsible for payment;
A Malaysian resident is responsible for payment; and
The royalty is charged as an expense against any income earned in or derived from Malaysia.

The payer must, within one month after the date of payment or crediting the royalty, remit the withholding
tax whether deducted or not to the Inland Revenue Board, Malaysia.

22
 TAXATION

WITHHOLDING TAX (WHT) 2% ON PAYMENT MADE TO

AUTHORISED AGENTS, DEALERS OR DISTRIBUTORS
Section 107D has been introduced by IRB under the Income Tax Act 1967 in National Budget 2022
which requires agents, dealers, and distributors whose received commissions exceed RM100,000
within a year to be deduct a 2% Withholding Tax (WHT) effective from 01st January 2022.

Payment has been granted a deferment from 01st January 2022 to 31st March 2022, which the
companies is allow to be paid in the month of April 2022.

Last Day for

Period for Remittance of
Date of Payment Remittance of
Withholding Tax
Withholding Tax

06th January 2022 07.01.2022 to 05.02.2022 30 April 2022

14th February 2022 15.02.2022 to 16.03.2022 30 April 2022

01st June 2022 01.06.2022 to 30.06.2022 31 July 2022

Further to the initial announcement, IRB has recently added some updates on 09th July 2022 as per
below:
i. Payment of 2% based on monthly accumulated payment
ii. Payment of 2% to be made latest by the last day of the next month

WHT 2% accumulated based on

Due date to remit to IRB
month

1 – 31 July 2022 31 August 2022

1 – 31 August 2022 30 September 2022

1 – 30 September 2022 31 October 2022

23
 TAXATION

WITHHOLDING TAX (WHT) 2% ON PAYMENT MADE TO

AUTHORISED AGENTS, DEALERS OR DISTRIBUTORS

iii. Company is required to make a declaration before payment made. A copy of Form CP107D (Pin
2/2022) in pdf format and Appendix CP107D(2) in excel format have to be sent via email to respective
payment centre.

Submission of forms and attachments via email are require to be attached when payment made at
IRB payment counter or by post.
*If the email is sent to the Pusat Bayaran Kuala Lumpur, payment can only be made at the Pusat
Bayaran Kuala Lumpur.

Payment Centre Email Address

Pusat Bayaran Kuala Lumpur pbkl-cp107d@hasil.gov.my

Cawangan Kuching pbkc-cp107d@hasil.gov.my

Cawangan Kota Kinabalu pbkk-cp107d@hasil.gov.my

iv. Ensure the accuracy of information provided in the Form & Appendix
v. Income tax number of payee must be stated in the Appendix CP107D(2)
vi. Forms CP107D (Pin 2/2022) and Appendix CP107D(2) are available to be downloaded at:

https://www.hasil.gov.my/borang/muat-turun-borang/muat-turun-borang-cukai-pegangan/?
subKategoriCukaiPegangan=Semua&tahun=Semua

24
 TAXATION

OFFENCE, FINES AND PENALTIES

Offences under the Income Tax Act 1967 and the penalties thereof include the following:

COMPANY

Pursuant to subsection 107C (7A) of the ITA:

i. Companies are required to submit Form CP204 by e-filing from the Year of Assessment 2018.
ii. Trust bodies, cooperatives and Limited Liability Partnerships (LLPs) are required to submit Form
CP204 by e-filing from the Year of Assessment 2019.

Companies, cooperatives, trust bodies and LLPs in operation must submit e-CP204 not later than 30
days before the commencement of the basis period for a year of assessment. Fails to file CP204 will
be fined between RM 200 to RM 2,000, or they could spend up to 6 months in jail, or both.

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 revised estimate or the original estimate of
tax payable (if no revised estimate furnished) is more than 30 % of the actual tax payable, a 10%
increase will be imposed on that difference.

The formula for calculating the amount of increase 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 original estimated tax payable (if no
revised estimate furnished)

Type of Offences Provisions Under ITA 1967 Penalties

Failure to furnish e-CP204
200.00 to 20,000.00 /
Imprisonment for a term not
exceeding 6 months / Both
120(1)(f)
*YA 2021-IRB is imposed 3%
based on last year estimated
amount.

Failure to pay monthly tax

estimate instalment / tax 107C(9) 10% on instalment due
payable

10% of the difference in actual

Actual tax 30% higher than the tax balances and estimated tax
107C(10)
revised estimate of tax made

Failure to pay the balance tax

103 10% on the outstanding tax
payable

25
 TAXATION

OFFENCE, FINES AND PENALTIES

INDIVIDUAL

CP500 is a “Notis Bayaran Ansuran” which means “Prepayment of Income Tax by Instalment”. Form
CP500 is a tax instalment scheme for a taxpayer that has income other than employment income such
as business income, rental income and royalties issued by IRBM. There are 6 bi-monthly instalment
payments, commencing from the month of March.

Form CP500 will be send out to taxpayer by Inland Revenue Board (IRB) every year at February. Tax
payer is allowed to revised via Form CP502 before 30 June for the current year of assessment.
However, if the revised tax instalment (Form CP502) is 30% lower than the actual tax payable, the
difference will be subject to a penalty of 10%.

The payment for Form CP500 should be made within 30 days from the date payable. A 10% penalty
will be added to the unpaid balance if the tax instalment (if any) is not paid by the filing date.

Type of Offences Provisions Under ITA 1967 Penalties

Pay instalments after 30

107B (3) 10% on instalment due
days of the date set.

10% of the difference in

Actual tax 30% higher than
107B (4) actual tax balances and
the revised estimate of tax.
estimated tax made

Pursuant to Section 103(3) of the Provisions Under ITA 1967, if individual taxes are paid after 30th April
for non-business income or 30th June for business income, there will be a penalty of 10% incurred.

Provisions Under
Source of Income Offence Penalties
ITA 1967

Paying taxes after

Non-business
30th April
10% increment from
103 (3)
the tax payable
Paying taxes after
Business
30th June

26
 TAXATION

OFFENCE, FINES AND PENALTIES

Aside from the list above, there are some common offences and fines available for both of the
categories. The list of tax offences is summarised here.

Type of Offences Provisions Under ITA 1967 Amount of Fine (RM)

Failure (without reasonable 200.00 to 20,000.00 /

excuse) to furnish an 112(1) Imprisonment for a term not
Income Tax Return Form. exceeding 6 months / Both

Failure (without reasonable 200.00 to 20,000.00 /

excuse) to give notice of 112(1) Imprisonment for a term not
chargeability to tax. exceeding 6 months / Both

Make an incorrect tax return

1,000.00 to 10,000.00 and
by omitting or understating 113(1)(a)
200% of tax undercharged
any income.

Give any incorrect

information in matters
1,000.00 to 10,000.00 and
affecting the tax liability of 113(1)(b)
200% of tax undercharged
a taxpayer or any other
person.

1,000.00 to 20,000.00 /
Wilfully and with intent to Imprisonment for a term not
evade or assist any other 114(1) exceeding 3 years / Both
person to evade tax. and 300% of tax
undercharged

Assist or advise (without 2,000.00 to 20,000.00 /

reasonable care) others to 114(1A) Imprisonment for a term not
under declare their income exceeding 3 years / Both

Attempt to leave the 200.00 to 20,000.00 /

country without payment of 115(1) Imprisonment for a term not
tax. exceeding 6 months / Both

Obstruct any authorized 1,000.00 to 10,000.00 /

officer of IRBM in carrying 116 Imprisonment for a term not
out his duties. exceeding 1 year / Both

27
TAXATION

OFFENCE, FINES AND PENALTIES

Type of Offences Provisions Under ITA 1967 Amount of Fine (RM)

Fails (without reasonable

300.00 to 10,000.00 /
excuse) to comply with an
119A Imprisonment for a term not
order to keep proper
exceeding 1 year / Both
records and documentation.

Fails (without reasonable

excuse) to comply with a 200.00 to 20,000.00 /
notice asking for certain 120(1) Imprisonment for a term not
information as required by exceeding 6 months / Both
IRBM.

Fails (without reasonable

200.00 to 20,000.00 /
excuse) to give notice on
120(1) Imprisonment for a term not
changes of address within 3
exceeding 6 months / Both
months.

Failure to furnish Country- 200.00 to 100,000.00 /

by-Country Report (CbCR) Imprisonment / Both

Incorrect return or
information for Mutual 200.00 to 100,000.00 /
Administrative Assistance Imprisonment / Both
Arrangement and for CbCR

200.00 to 100,000.00 /
Failure to furnish transfer
Imprisonment / Both
pricing documentation

Failure to comply with IRB’s

request for taxpayer’s bank
200.00 to 20,000.00 /
account information for
Imprisonment / Both
purposes of garnishee order
(w.e.f 1 January 2022)

28
TAXATION

METHOD OF PAYMENTS

Payments to Inland Revenue Board Malaysia (IRBM)/Lembaga Hasil Dalam Negeri Malaysia
(LHDNM) can be done by few methods as per below:

1) Online payment via ByrHasil (FPX Service)

2) Manual payment at Bank counter (IRBM collection agents)
3) Manual payment at IRBM’s payment counter – Limited to selected payments
4) Post / Courier – Limited to selected payments
5) New system introduced – e-Telegraphic Transfer System

Online Tax Payment

ByrHASiL Through FPX Services

The e-payment portal at IRBM website enables taxpayer to pay income tax through FPX
gateway. User need to register for internet banking service with any commercial banks listed
as FPX associate.

Payment can be made online at IRBM website www.hasil.gov.my by clicking ‘Perkhidmatan

ezHasil’ > ‘ByrHASiL’

ByrHASiL using Credit Card / Debit card

Taxpayer can pay Income Tax and Real Property Gains Tax (RPGT) online using credit or debit
card at Brazil portal : https://byrhasil.hasil.gov.my/creditcard/

Manual payment at Bank counter

(IRBM Collection Agents)

a) Payment over the counter

Tax payment can be made by cash, cheques and Direct Debit for individuals and companies at
various bank branches throughout Malaysia;

1. CIMB Bank
2. Public Bank
3. Maybank
4. POS Malaysia (cash payment only)
5. Affin Bank
6. Bank Rakyat
7. Bank Simpanan Nasional

29
TAXATION

METHOD OF PAYMENTS

Manual payment at Bank counter

(IRBM Collection Agents)

Certain charge/fee will be imposed by Banks for cash and cheque payments at service
counters as shown at the above table.

‘The Bank-In Slip’ provided at the bank counter must be completed for payment purposes and
the copy must be kept as proof of payment. IRBM will not issue payment receipts for payment
made at the bank.

30
TAXATION

METHOD OF PAYMENTS

Manual payment at Bank counter

(IRBM Collection Agents)
b) Payment via internet

Income Tax, Real Property Gains Tax (RPGT) and Monthly Tax Deduction (MTD) can be paid
through electronic banking channels of various commercial banks which have been appointed
as direct tax collection agent:

Acknowledgment receipt issued through internet banking must be kept as proof of payment.
31
 TAXATION

METHOD OF PAYMENTS

Manual payment at IRBM’s Payment

Counter

Inland Revenue Board Malaysia (IRBM) has restricted the type of services being provided at its
Payment Counter in Kuala Lumpur, Kuching and Kota Kinabalu. The changes were in line with
government policy to increase the usage of electronic payment medium and improving the
effectiveness of tax collection process.

Effective from 1st April 2021, IRBM Payment Counter only accept limited type of payment as
listed below:

1. Real Property Gains Tax (RPGT) – 3% of assets disposal value withheld by the purchaser
under section 21B of RPGT 1976 (CKHT 502 Form)
2. Income tax paid by Foreign Artists (Public Entertainer)
3. Withholding Tax
4. Compound payment
5. Payment of income tax using credit card or debit card

Payment of other taxes were no more accepted at IRBM Payment Counter but instead can be
paid through other available options:

1. MyTax Portal (https://mytax.hasil.gov.my) through ‘ezHasil Services’ > ‘ByrHASiL’

2. Internet banking portal of any commercial banks which have been allowed to accept direct
tax payment
3. The service counter of Commercial Banks and Post Office which have been appointed as
IRBM collection agent.
4. Cash Deposit Machine (CDM) of several commercial banks
5. Auto Teller Machine (ATM) of several commercial banks

Tax Payment Using Credit and Debit Card at IRBM Payment Counters

IRBM Payment Counters at Kuala Lumpur, Kota Kinabalu and Kuching can accept tax payment
using credit and debit card.

All VISA, Mastercard, American Express credit cards and debit cards issued in Malaysia can
be used for tax payment.

32
 TAXATION

METHOD OF PAYMENTS

Payment by Post / Courier

Effective from 1st January 2021, IRBM no longer accept income tax payments using cheque
sent by post or courier. The shift in policy intend to increase the usage of e-payment method
provided by the IRBM and to eliminate bounced or dishonoured cheque.

However, the restriction not applicable on several payments that currently not yet available
through online method:

Real Property Gains Tax (RPGT) – 3% of assets disposal value withheld by purchaser under
section 21B of RPGT 1976 (CKHT 502 Form)
Income tax paid by Foreign Artists (Public Entertainer)
Withholding Tax
Compound payment

Payment send by post has to be made using crossed cheque/bank draft and made payable to
"THE DIRECTOR GENERAL OF INLAND REVENUE". Taxpayer must provide name of the
company, tax reference number, instalment number, year of assessment and their address at
the back of the cheque.

Post-dated cheques and cheques issued by banks outside Malaysia are not accepted. Payment
by cash should not be send by post. Cheque/bank draft has to be submitted to IRBM Payment
Centre in Kuala Lumpur, Kota Kinabalu or Kuching.

Peninsular Malaysia Sabah Sarawak

Inland Revenue Board

of Malaysia, Kuala Inland Revenue Board
Inland Revenue Board
Lumpur Payment of Malaysia, Collection
of Malaysia, Collection
Centre, Unit,
Unit,
Level 15, Block 8A, Ground Floor, 3 & 4
Level 1, Wisma Hasil,
Government Office Wisma Hasil, Jalan
No. 1, Jalan Padungan,
Complex Jalan Tunku Tunku Abdul Rahman,
93100 Kuching,
Abdul Halim, P.O Box 88600 Kota Kinabalu,
Sarawak
11061, 50990 Kuala Sabah
Lumpur

33
 TAXATION

METHOD OF PAYMENTS

Tax Payment Using e-Telegraphic

Transfer System (New)
a) e-Telegraphic Transfer System

IRB has rolled out the new e-TT system which will generate a unique account number (i.e.
Virtual Account Number) as a payment identification. This will assist the MIRB to trace the
electronic transfer of funds by taxpayers to its accounts and to identify the taxpayers.
Therefore, effective 1 April 2022, taxpayers who wish to make payments through Telegraphic
Transfer, Electronic Funds Transfer and Interbank Giro from within and outside Malaysia, are
required to obtain a Virtual Account Number.

The Virtual Account Number generated under the e-TT system caters for the following types of
taxes:-

i. Income tax

ii. Withholding tax (one number for one payee)

iii. Petroleum income tax

iv. Compound

v. Public entertainer

vi. Real Property Gains Tax – Section 21B retention sum payment

Each Virtual Account Number can only be used for one transaction and to be noted that the e-
TT system is currently not applicable for withholding tax payments under Sections 107D and
109DA of the Income Tax Act, 1967.

b) Steps of payment

i. Visit the My Tax Portal at https://mytax.hasil.gov.my

ii. Click on ezHasil Services > submenu e-TT

iii. Fill up the required payment information to generate the VA number

iv. Use the VA Number as payment account number when making payment through TT at the
bank counter or through electronic banking portal.

34
TAXATION

TAX RELIEF 2022

35
TAXATION

EPF RATE & MINIMUM WAGE

EPF RATE

EPF reduced employees’ contribution to 9% during the height of the pandemic.

However effective 1 July 2022, the statutory contribution rate for employees below 60
years of age has return to 11% (August 2022 EPF contribution).

MINUMUM WAGE

Effective 1st May 2022, minimum wage of employees’ increased by 25 percent from RM 1,200
to RM 1,500. The National Wage Consultative Council Act 2011 obligates the government to
review the minimum wage every two years. The last time the minimum wage was reviewed
and increased was on 1st February 2020.

Currently, the wage increase will only apply to businesses in the private sector that have
five employees or more.

For the employers who have less than five employees, the RM 1,500 minimum wage will only
enforced from 1st January 2023.

Employer whose business activities is classified under the Malaysia Standard Classification
of Occupations (MASCO) must also pay the RM 1,500 (US$341), regardless of the number of
employees they have.

The new minimum wage equates to:

RM 57.69 per day for employees working six days per week;
RM 69.23 per day for employees working five days per week; and
RM 86.54 per day for employees working four days per week.

36
 NOTIFICATION OF CHANGES IN THE BUSINESS
ADDRESS (INCLUDING BRANCHES) AND/OR
NATURE OF BUSINESS

This practice Directive is issued pursuant to Section 20C of the Companies

Commission of Malaysia Act 2001 and Section 610 of the Companies Act
2016.

1.Currently, a Company intending to change its business address (including

branches) and /or nature of business can only notify SSM of such changes
through the lodgement of Annual Return.

2.Nevertheless, SSM is aware of the need and urgency of the information

pertaining to the changes in the business address (including branches)
and/or the nature of business and be reflected as part of the Company’s
profile due to the requirements of some other authorities.

3.Where a Company has resolved to change its business address (including

branches) or its nature of business, of the Company is required to notify
SSM within 14 days from the date of such change.

4.Notwithstanding paragraph 4, a Company limited by guarantee is not

allowed to change its nature of business unless otherwise made through an
amendment to its constitution.

5.A Company is not allowed to state its nature of business as “DORMANT”

as the nature of business of a Company should be reflective of the type of
business activities the Company was registered for. Therefore dormancy is
merely the status of a Company reflectiveof its financial statements and not
the nature of business for a Company.

6.The notification shall be in a form and manner as specified in schedule B

of the Practice Directive 1/2017.

7.This Practice Directive superseded the Practice Directive 2/2017 issued

on 18 April 2017 and the Amendment to the Practice Directive 2/2017
issued on 10 July 2018.

37

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