Malaysia | Employment Tax | Key updates on tax clearance applications and notification of new employee

Employment Tax

Malaysia | Key updates on tax clearance applications and notification of new employee

Summary

On 31 July 2024, the Inland Revenue Board of Malaysia (MIRB) released an official letter to various professional bodies in Malaysia, outlining some updates to the requirements for submitting the tax clearance letter application (SPC) for employees and the Notification of New Employees (Form CP22).

The detail

In general, the MIRB has now mandated that both submissions be made electronically through their official website, myTax. The following details provide further elaboration on the new directives: –

Tax Clearance Application (e-SPC) for Employees by Employers
Amendments or Additions to e-SPC applications	Past Process (Prior to 1 August 2024):  From 1 January 2024, tax clearance application is mandatory to be submitted through myTax portal using e-SPC application. However, applications for amendments or additions or cancellations must be submitted to the IRBM office that handles the employee’s income tax file or to the nearest IRBM office. Applications for amendments or additions or cancellations by email or through online customer feedback form is allowed if the original tax clearance application has been submitted via e-SPC.   New Requirement (Effective 1 August 2024): Applications for amendments or additions can be submitted by employers via e-SPC. Effective 1 September 2024, it is mandatory to submit applications for amendments or additions via e-SPC and manual submissions will no longer be allowed.
Submission of CP22A/ CP22B in batches	Effective 1 September 2024, the new format must be used for submission of Form CP22A/ CP22B in batches via e-SPC.   The relevant information of the forms such as information layout, sample txt. file and country code can be found in e-SPC.
Employees eligible for exemption from e-SPC application	For cessation of employment / termination of employment / cessation by reason of death The employer is not obligated to submit e-CP22A/ e-CP22B if:- the employee’s income is not chargeable to tax, or the employee is a Malaysian citizen who did not receive compensation/ gratuity from termination, and the employee’s monthly income is below the minimum amount that subject to Monthly Tax Deduction (MTD), or the employee’s income has been subjected to MTD.   Please refer to Table 1 below for the general guide provided by MIRB for employers to determine whether forms CP22A/ CP22B notification is required to be submitted.

Submission of Notification of New Employee (e-CP22)
Mandatory Online Submission	Effective 1 September 2024, submission through e-CP22 is mandatory. Individuals authorised by the employer in myTax can access the e-CP22. Manual submissions to the MIRB office will no longer be accepted.
Tax Agents Authorised to Submit	Effective 1 August 2024, tax agents can access the e-CP22 in Tax Agent e-Filing System (TAeF).
New Formats and Procedures	Employers can now submit e-CP22 either via: ·       web form (for individual employees); or ·       uploading a specified txt format in myTax (for batch of employees)   The relevant information of the form such as information layout, country code, designation index and employee information attachment can be found in e-CP22.

 

 

Critical Considerations
Login Credentials and having employer role in myTax	Employers must ensure that they or their authorised personnel have valid login credentials to their myTax account. For e-CP22, authorised employees must be added with an employer role in myTax in order to access e-CP22
Extract information from payroll system	With the availability of batch submission for e-CP22A/ e-CP22B and e-CP22, employers should ensure the relevant information can be easily exported from the payroll system and meet the requirements of information layout of the .txt file.
Accuracy and Deadlines	Employers need to be vigilant regarding deadlines and the accuracy of the information provided, as the MIRB can now easily verify their records. Incorrect information may result in the rejection of submissions and non-compliance could result in penalties. Therefore, it is essential to oversee the management of these submissions by setting up internal tracking systems to monitor the status of each submission and maintaining file records for up to seven years.

We can provide guidance to the employers on the appropriate data formats required by MIRB and assist in preparing the documentation and information to ensure compliance. Please feel free to let us know if any assistance is required from us.

Table 1:

 

Source: https://www.hasil.gov.my/en/employers/termination-of-service/

 

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Hilda Liow
Partner

Lim Phing Phing
Partner

Wee Lay Har
Director

Loh Zi-Lynn
Senior Manager

Further information on Vialto Partners can be found here: www.vialtopartners.com

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