5 Things to Know When Preparing for Tax Season in Malaysia

Disclaimer: This article should not be considered to be legal advice, and altHR is not liable for any actions taken based on this article. As of 1 July 2023, altHR no longer offers a Payroll module.

Tax season is right upon us! Of course, this can be a challenging time for many employees — particularly those who are filing their tax returns for the very first time — as well as employers and HR managers who are generating EA forms for their employees. Regardless, there are only two certainties in life: death and taxes, so you certainly need to get a handle on it. 

With that in mind, here are 5 important things you need to know about when preparing for tax season in Malaysia!

1. When do employees need to file tax returns in 2022 (for YA 2021)?

The answer depends on the type of tax form that you’re filing — which is determined by whether you’re a salaried employee, someone who carries on a business, whether you’re a resident/non-resident, and a number of other categories. 

For many of you, however, you’ll be filing your tax returns via Form BE (residents who do not carry on business), which has a deadline of the 30th of April 2022. You get a grace period of 15 days if you submit your file via e-Filing, which effectively means that the final deadline for Form BE submissions is the 15th of May 2022. 

2. What about individuals who carry on business?

If you are a resident individual running your own business, you’ll be submitting Form B (or Form e-B, for e-Filing). In this case, your deadline for submitting your tax returns in 2022 for the Year of Assessment (YA) 2021) is the 30th of June 2022, with the deadline for e-Filing submissions being the 15th of July 2022. 

For the full details on deadlines for different submissions, click here.

3. Who needs to file for income tax in Malaysia?

According to the Lembaga Hasil Dalam Negeri (LHDN), any individual earning a minimum annual income of at least RM34,000 after EPF deductions must register a tax file with the tax department. If you look at your monthly payslip, those taking home RM2,833 after EPF deductions are eligible to be taxed by the tax authorities. 

Do note that the income here shouldn’t simply be limited to the income you draw from your “main” job — you should also declare money earned from part-time or freelance work as well. 

4. When should employers issue EA forms? 

The LHDN states that all employers must issue EA forms to their present and former employees who worked for them during the year of assessment by the 28th of February of the following year. This means that for YA 2021, you should have already received your EA from your employers by the 28th of February 2022.

If you have worked for more than one employer over the course of 2021, be sure to reach out to the HR department of any previous companies that you worked at during the year of assessment for a separate EA form. Click here to find out more about filing your taxes if you worked for multiple employers in the year. 

5. Are benefits taxable in Malaysia?

This isn’t such a straightforward answer, as it depends on the type of benefits — as well as exemptions as covered by the LHDN. In short, there are two types of benefits: 

• Benefits-in-kind (benefits that are not convertible into money)
• Perquisites from employment (in cash, or convertible into money)

Both categories are technically taxable, although there are exemptions including petrol benefits, medical benefits, and others. Something you should note is that none of these exemptions would apply if the employee in question is a director, or an employee who has “control over his employer” via holding of shares, or others.

Find out more about that here.