In conjunction with the announcement made by the Prime Minister Datuk Seri Anwar Ibrahim on 3 February 2025, the EPF Board has issued an official media release on 25 June 2025, confirming that mandatory Employees Provident Fund (EPF) contribution will be enforced for all non-Malaysian citizen employees working in Malaysia and earning wages, regardless of nationality.
This change marks a shift from the current voluntary contribution framework to a compulsory regime, consistent with the MADANI Government’s priorities to enhance equity and fairness in the Malaysian labour market as outlined in Budget 2025.
Non-Malaysian citizen employees who are required to contribute under the EPF scheme
According to the EPF statement dated 25 June 2025, all employers who employ foreign workers possessing valid passports and passes that permits them to work by the Immigration Department of Malaysia (except foreign domestic workers), are obliged to ensure that their foreign workers are contributing to the EPF scheme through the provision under the Employees Provident Act 1991 taking effect with wages for the month of October 2025.
Non-Malaysian citizen employees holding the following types of passes will be subject to EPF contributions:
*According to Section 3 of the Workmen’s Compensation Act 1952, “Domestic servants” are individuals who work as, among others: Maid, Cook, Gardener, Cleaner, Babysitter, Driver and others.
Rate of contribution
Both the employer and the foreign worker are each required to make contributions to Malaysia’s EPF at the rate of 2% on the foreign worker’s monthly wage. Revision on the statutory contribution rate will be made from time to time as applicable.
Contribution rates for Non-Malaysian citizen employees starting from October 2025:
|
Non-Malaysian citizen employee category | Contribution rates effective from October 2025 | |||
| Less than 60 years old | Attained 60 years old | |||
| Employer | Employee | Employer | Employee | |
| Non-Malaysian citizen employees who are permanent residents in Malaysia | 13% or 12% | 11% | 6.5% or 6% | 5.5% |
| Non-Malaysian citizen employees who became EPF members before 1 August 1998 | 13% or 12% | 11% | 6.5% or 6% | 5.5% |
| Non-Malaysian citizen employees who became EPF members after 1 August 1998 | 2% | 2% | 2% | 2% |
Effective date and contribution deadline
The expansion of EPF mandatory contribution coverage to non-Malaysian citizen employees will take effect from the October 2025 wages. Contribution payment is due on the 15th day of each following month. For October 2025 wages, the contribution is due by 15 November 2025.
Cessation of contribution
Liability to contribute for non-Malaysian citizen employees should cease in the last 2 months before the employee’s pass expires.
Withdrawal of contributions
Foreign employees who are no longer employed in Malaysia or intend to permanently leave Malaysia can apply for full withdrawal of the contributions together with dividends declared without any further tax implications. The withdrawal process should commence 2 months before the expiry of work permit, termination of contract by employer or date of resignation. For more details, please refer here.
Other administrative matters
Employers need to ensure that the amount of contributions, both by employer and employee, are stated in the payslip and given to the foreign worker.
Non-Malaysian citizen employees who wish to maintain the employee’s contribution rate at 11% after the effective date must submit the excess contribution election form to their employer. The employer must also submit the application to contribute above the statutory rate via i-Akaun (employer).
Key considerations for Malaysian employers
There are several important points to be taken into consideration by Malaysian employers before the enforcement date:
1. Mandatory registration and contribution
Malaysian employers are required to register all eligible non-Malaysian citizen employees with the EPF Board and contribute according to the statutory rate.
2. Review and update company’s internal policies to reflect mandatory changes
Malaysian employers should review Company’s internal policies and remuneration package for non-Malaysian citizen employees, and update as applicable.
3. Malaysia employment tax implications
If an employer elects to bear both the employer’s and employee’s share of the EPF contributions, the employee’s portion paid by the employer will be treated as a taxable perquisite. This will result in the following:
4. Assess overall assignment/mobility cost
Overall assignment cost may increase due to:
Notwithstanding the above, the lump sum withdrawal of the employer and employee contributions together with the dividends declared prior to the permanent departure of the employee from Malaysia will not attract any further tax implications.
Points Requiring Further Guidance From the EPF Board
While the EPF Board has stated the contribution position for foreign employees in their FAQs, there are certain ambiguities to be clarified for the following circumstances:
a. The position of contribution for foreign employees in Malaysia who are also required to contribute to their home country pension/retirement funds and whether there is any exemption given that Malaysia has no totalisation agreements with other countries on pension contributions.
b. The position of foreign employees paid from an overseas payroll and where the costs are not charged back to the Malaysian entity.
We strongly recommend employers to begin reviewing their compensation structure and payroll systems in preparation for the upcoming changes to mitigate tax exposures and ensure full compliance.
As a global mobility service organisation, we are ready to assist our clients in ensuring full compliance with the new EPF requirements. We can provide guidance on the implications of the newly mandated EPF contributions for foreign workers, helping organisations understand their responsibilities and ensuring adherence to the forthcoming legislative changes.
For further details regarding this, or any other immigration matter, please contact a member of our team at Vialto Partners LLP.
Hilda Liow
Partner
Lim Phing Phing
Partner
Wee Lay Har
Director
Loh Zi-Lynn
Senior Manager
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