The Inland Revenue Board of Malaysia (“HASiL”) has uploaded the Operational Guidelines on MTD under Income Tax Rules (Deduction from Remuneration) 1994 [P.U.(A) 507/1994] (“GPHDN 1/2024”) (in Bahasa Malaysia) dated 2 January 2024 on its website. The guideline referred to in the provided citations is a set of operational instructions issued by the Lembaga Hasil Dalam Negeri Malaysia (Inland Revenue Board of Malaysia) regarding the Potongan Cukai Bulanan (PCB), which is the monthly tax deduction system under the Income Tax (Deduction from Remuneration) Rules 1994 [P.U.(A) 507/1994].
The guideline aims to assist employers in accurately determining the amount of PCB to be deducted from their employees’ monthly remuneration in compliance with the relevant tax laws and regulations.
Here is a summary of the guideline:
1. Introduction:
The guideline is designed to help employers correctly determine the PCB amount in line with the Income Tax (Deduction from Remuneration) Rules 1994 and the prevailing laws at the time of publication.
2. Objective:
It explains the responsibilities of employers regarding the implementation of PCB on employees’ monthly remuneration and the methods for determining the amount of PCB.
3. Employer’s Responsibilities:
Employers are responsible for executing the PCB from each employee’s remuneration every month as outlined under section 107 ACP and subrule 10(1) of the Income Tax (Deduction from Remuneration) Rules 1994.
4. Calculation of PCB:
The guideline provides a structured approach to calculating PCB, which includes determining PCB on net regular income for the year, calculating PCB for additional income for the current month, and determining the total PCB to be paid for the current month.
5. Use of e-PCB System and PCB Calculator:
Employers who do not use computerized payroll software are encouraged to use the e-PCB system, e-CP39, and the PCB Calculator provided for free on the official LHDNM portal through MyTax > ezHasil Services.
6. Cancellation and Disclaimer:
The guideline cancels the previous Operational Guideline No. 4 of 2020 dated November 17, 2020, and includes a disclaimer that examples provided are for illustration purposes only and are not exhaustive.
This guideline is essential for employers to ensure compliance with Malaysian tax laws and to facilitate the correct deduction of taxes from employees.
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