payroll-guides
Published on 07 Mar 2023
OS HRS takes care of your multi-country payroll with local regulatory expertise. From Malaysia, across Asia Pacific and beyond, we are the payroll partner of global leaders. Not sure where to start when it comes to multi-country payroll? Here’s our quick payroll guide for your Malaysia business operations.
Currency | MYR - Malaysia RInggit |
Payroll cycle | Monthly |
Employer taxes | 18.95% - 22.45% |
Minimum wage | MYR 1500 per month for private sector companies with 5+ employees |
Working hours | 8 hours a day, maximum of 45 hours a week |
Payroll in Malaysia involves a number of compliance requirements, including the calculation and withholding of taxes, social security contributions, and other deductions. Below is an overview of the key steps involved in processing payroll for employees in Malaysia:
Register with the Inland Revenue Board (IRB) as an employer. This will allow you to obtain a tax file number (TFN) and a business registration number.
Obtain a tax file number for each employee. Employers are responsible for withholding taxes from employee salaries and wages, and remitting them to the local tax authority.
Set up a system for calculating and withholding taxes, including income tax and the Employee Provident Fund (EPF) contributions. The local tax authority provides a range of calculators and tools to assist with this process.
Make social security contributions on behalf of your employees. In Malaysia, employers are required to make a minimum of 12% of an employee's salary to the EPF and 1% to the SOCSO (Social Security Organisation).
Keep accurate records of all payroll transactions and comply with reporting requirements. The local tax authorities requires employers to provide regular reports, including monthly and annual returns.
Ensure that you are meeting all other compliance requirements, such as leave entitlements, overtime and minimum wage.
What do you as an employer need to make in employer contributions?
12.00% - 13.00% | Employee Provident Fund (<60 years) |
4.00%-6.50% | Employee Provident Fund (>60 years) |
1.75% | Social Security Contribution (SOCSO) |
0.20% | Employment Insurance (EIS) (salary <MYR5,000) |
1.00% | Human Resource Development Fund (> 10 employees) |
18.95%-22.45% | Total Employment Cost |
What do your employees need to set aside in contributions?
11.00% | Employee Provident Fund (<60 years) |
0.00%-5.50% | Employee Provident Fund (>60 years) |
0.50% | Social Security Contribution (SOCSO) |
0.20% | Employment Insurance (EIS) (salary <MYR5,000) |
9.70%-17.20% | Total Employee Cost |
What are the income tax rates in Malaysia?
0.00% | Up to MYR5,000 |
1.00% | MYR5,001 - MYR20,000 |
3.00% | MYR20,001 - MYR35,000 |
6.00% | MYR35,001 - MYR50,000 |
11.00% | MYR50,001 - MYR70,000 |
19.00% | MYR70,001 - MYR100,000 |
25.00% | MYR100,001 - MYR400,000 |
26.00% | MYR400,001 - MYR600,000 |
28.00% | MYR600,001 - MYR2,000,000 |
30.00% | MYR2,000,001 and above |
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Reach out to OS HRS for a discovery call today!
Last updated September 2024
