Important Update for Employers - Starting from the year 2024.

Changes to employers' tax form submissions starting from 1 January 2024.

Important update for employers: Starting on 1 January 2024, Malaysia made a pivotal shift towards digitalisation in submitting specific employment-related tax forms. Here's a straightforward guide to understanding this change and what it means for employers:

Forms transitioning to MyTax Portal

1. Form CP21 - For employees leaving Malaysia for more than three months

2. Form CP22 - For newly hired employees

3. Form CP22A - For cessation or termination of employment, including cases due to death

4. Form CP22B - Specifically for employees of Government Agencies
   

Understanding each form

• Form CP21

  • Purpose: For employees departing Malaysia for over three months.

  • Who Submits? Employers, when their tax-chargeable employees plan to leave Malaysia.

  • Submission Timeline: At least 30 days before the employee's departure.

  • How to Submit: Via MyTax Portal, submissions must be made by the company director or an appointed representative.

  • The employer is not required to furnish CP21 if the LHDN is satisfied that the employee is required to leave Malaysia frequently during the course of his employment.
    

• Form CP22

  • Purpose: To notify about a new employee who's chargeable to tax.

  • Who Submits? Employers, upon hiring a new employee chargeable to tax.

  • Submission Timeline: Within 30 days from the start date of employment.

  • How to Submit: Via MyTax Portal, submissions must be made by the company director or an appointed representative.
    

• Form CP22A

  • Purpose: Notice of an employee's cessation of employment.

  • Who Submits? Employers, when an employee ends employment or passes away.

  • Submission Timeline: Not less than 30 days before cessation or no more than 30 days after being informed of death.

  • How to Submit: Via MyTax Portal, by the company director or an appointed representative.
    

Fundamental rules and consequences of non-compliance

• Withholding Pay: Employers must withhold any final pay for at least 90 days after the LHDN receives the forms CP21 and CP22A or until they receive clearance from the LHDN, especially for employees leaving Malaysia for more than three months or ceasing employment.

• Non-compliance Penalties: Failure to comply can result in fines ranging from RM200 to RM20,000, imprisonment for up to six months, or both. Additionally, employers may be held responsible for the total tax amount due from the employee.
  

Preparing for the change

Directors are encouraged to:

• Get acquainted with the MyTax Portal.

• Understand the submission process and deadlines.

• Ensure all relevant company representatives are informed and trained on the new process.

This transition marks a significant move towards improving efficiency and compliance in tax administration. By staying informed and prepared, employers can navigate these changes smoothly, ensuring they remain compliant and avoid potential penalties. Remember, embracing these updates is not just about adhering to new requirements; it's about participating in the broader move towards digital governance and streamlined processes.

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Please note that tax laws can change, and it's essential to verify the latest updates with the authority or consult a tax professional to ensure that you're submitting your tax forms based on the most recent regulations.

For further clarification, please get in touch with us at gunalan@gskassociates.net or the manager with whom you typically engage or who oversees your organisation's tax matters.