Let’s have a go at describing Malaysian payroll in 200 words...
For each employee, you start with gross salary for the month.
Then you need to deduct tax, pension and social security contributions to get to the net monthly salary:
PCB: monthly tax deductions based on provisional annual income and with a progressive tax rate up to 30%; payable to LHDN by 15th of the following month.
EPF: retirement scheme contributions; employee contribution rate is 11% for Malaysians under 60; employers also contribute 12/13% depending on salary; payable to KWSP by 15th of the following month.
SOCSO: social security protection in case of injury/invalidity; for the main scheme (Malaysians under 60) the employee contributes 0.5% and the employer 1.75%; payable to PERKESO by 15th of the following month.
EIS: employment insurance scheme to provide financial assistance to retrenched employees; Malaysians aged 18 to 60 contribute 0.2% and the employer 0.2% as well; payable to PERKESO by 15th of the following month.
Every year the following forms must be provided:
EA forms to be given to each employee detailing their income and contributions during the year; by end of February of the following year.
E form detailing income and contributions of all employees to be filed online with LHDN by 31 March of the following year.
Well that’s 210 words, but if you’re still wondering how to calculate PCB, which payments are exempt from EPF, or whether a foreigner needs to contribute under SOCSO, click here to download our A to Z guide to Malaysian Payroll!