Global Payroll Association Presents. Malaysia

Transcription

1 Global Payroll Association Presents Malaysia

2 12 Global Payroll Association Presents Malaysia A Brief Country Overview and Payroll Highlights A brief country overview: Malaysia boasts one of south-east Asia's most vibrant economies, the fruit of decades of industrial growth and political stability. Its multi-ethnic, multi-religious society encompasses a majority Muslim population in most of its states and an economically-powerful Chinese community. Consisting of two regions separated by some 640 miles of the South China Sea, Malaysia is a federation of 13 states and three federal territories.

3 13 Key Country facts Official Language: Malay (official), English, Chinese dialects, Tamil, Telugu, Malayalam Currency: Malaysian ringgit Time Zone: Malaysia Time Zone (UTC+08:00) Country abbreviation: MY Country dial code: +60 Statutory filing payment methods: yes National minimum wage: Malaysia has introduced a minimum wage for the first time in a move to support low income households and amid speculation that the government may call elections soon. Private sector workers in peninsular Malaysia will receive a minimum salary of 900 ringgit ($297; 183) a month. Fiscal Year: 1 January 31 December Monthly filing deadline: 10 th of following month Annual filing Deadline: Return of Remuneration from Employment, Return of Remuneration by an Employment, Statement of Tax Deduction and Tax remittance for individual employee. Process additional earnings for year-end tax declaration (for payroll-related items and benefits in kind as advised by the Customer). Prepare and file the Form E (Annual Remuneration and Deductions Statement), and CP8D to the Internal Revenue Board of Malaysia (IRBD) before 31 of March of the following year. Public Holidays in Malaysia 2015 Date Day Holiday State 1 Jan Thurs New Year All states except Johor, Kedah, Kelantan, Perlis & Terengganu 3 Jan Sat Prophet Muhammad's National 14 Jan Wed Yang Di-Pertuan Besar Negeri Sembilan's Negeri Sembilan 18 Jan Sun Sultan of Kedah's Kedah 1 Feb Sun Federal Territory Day Kuala Lumpur, Labuan & Putrajaya 2 Feb Mon Federal Territory Day Replacement Holiday Kuala Lumpur, Labuan & Putrajaya

4 14 3 Feb Tues Thaipusam Kuala Lumpur, Putrajaya, Johor, Negeri Sembilan, Perak, Penang & Selangor 19 Feb Thurs Chinese New Year National 20 Feb Fri Chinese New Year 2nd Day National 4 Mar Wed Anniversary of Installation of Sultan of Terengganu Terengganu 3 Apr Fri Easter - Good Friday Sabah & Sarawak 15 Apr Wed Declaration of Melaka as a Historical City Melaka 26 Apr Sun Sultan of Terengganu's Terengganu 1 May Fri Labour Day National 3 May Sun Wesak Day National 7 May Thurs Hari Hol Pahang Pahang 16 May 17 May 30 May Sat Israk & Mikraj Kedah, Negeri Sembilan & Perlis Sun Raja Perlis' Perlis Sat Harvest Festival Sabah & Labuan 31 May Sun Harvest Festival 2nd Day Sabah & Labuan 1 Jun Mon Hari Gawai Sarawak 2 Jun Tues Hari Gawai 2nd Day Sarawak 6 Jun Sat Agong's National 18 Jun* Thurs Awal Ramadan Johor, Kedah & Melaka

5 15 4 Jul Sat Nuzul Al-Quran Kelantan, Kuala Lumpur, Labuan, Pahang, Perak, Perlis, Penang, Putrajaya, Selangor & Terengganu 7 Jul Tues Georgetown World Heritage City Day 11 Jul Sat Penang Governor's Penang Penang 17 Jul* Fri Hari Raya Aidilfitri National 18 Jul* Sat Hari Raya Aidilfitri 2nd Day National 31 Aug Mon National Day / Merdeka Day National 12 Sep Sat Sarawak Governor's Sarawak 16 Sep 24 Sep* Wed Malaysia Day National Thurs Hari Raya Haji National 25 Sep* Fri Hari Raya Haji 2nd Day Kedah, Kelantan, Perlis & Terengganu 3 Oct Sat Sabah Governor's Sabah 9 Oct Fri Melaka Governor's Melaka 14 Oct Wed Awal Muharram National 24 Oct Sat Sultan of Pahang's Pahang 10 Nov* Tues Deepavali National (except Sarawak) 11 Nov Wed Sultan of Kelantan's Kelantan

6 16 12 Nov Thurs Sultan of Kelantan's 2nd Day Kelantan 18 Nov Wed Hari Hol Almarhum Sultan Johor Johor 22 Nov 27 Nov Sun Sultan of Johor's Johor Fri Sultan of Perak's Perak 11 Dec Fri Sultan of Selangor's Selangor 24 Dec Thurs Prophet Muhammad's National 25 Dec Fri Christmas National

7 17 Business and culture in Malaysia What you need to know about processing payroll in Malaysia Establishing as an Employer in Malaysia Companies are required to register as an employer for tax, employee s provident funds, social security funds and HRDF (Human Resources Development Fund) (if applicable). Other registration: To Tabung Haji and Zakat can be completed for Muslim employees if such deduction is required. Generally, the acts that apply in relation to employment in Malaysia include; Employment Act 1955, Income Tax Act 1967, Employees Provident Fund Act 1991, Employee s Social Security Act 1969, Human Resources Development Act 2001, Industrial Relation Act 1967, etc. Employment In Malaysia employment law is outlined in the Employment Act 1955 and the Industrial Relations Act 1967, which deal with relations between employers, employees and trade unions. The Employment Act gives minimum terms and conditions for manual workers and non-manual workers who earn less than a defined amount. It covers full-time, part-time, temporary and contract employment. Part-time work is classed as being employed for less than 70 percent of the time of a full-time employee in a similar job. Casual workers, who are hired only when needed, are not covered by the Employment Act. Working hours are limited by: consecutive hours with a period of rest for at least 30 minutes (any break of less than 30 minutes in the five consecutive hours shall not break the continuity of that five consecutive hours) or 8 hours must include a period of rest (including meal) of at least 45 minutes; 2. 8 hours in one day; 3. a spread-over period of not exceeding 10 hours in one day/48 hours in one week. The Petronas Towers, also known as the Petronas Twin Towers (Malay: Menara Petronas, or Menara Berkembar Petronas), are twin skyscrapers in Kuala Lumpur, Malaysia. According to the Council on Tall Buildings and Urban Habitat (CTBUH)'s official definition and ranking, they were the tallest buildings in the world from 1998 to 2004 and remain the tallest twin towers in the world replacing the World Trade Center in New York. The buildings are a landmark of Kuala Lumpur, along with nearby Kuala Lumpur Tower.

8 18 Getting down to business Visas and work permits in Malaysia Anyone who needs a visa to enter Malaysia must apply at the Malaysian Representative Office in their home country. The Immigration Department of Malaysia has information about entry visas and application procedures. Work Visas or Passes There are three main types of work visa or pass in Malaysia: Professional Visit Pass (PVP) Employment Pass Visitor's Pass/Temporary Employment Other work visas or passes include: Visitor's Pass (Professional) Malaysia Automated Clearance System (MACS) Short Term and Long Term Social Visit Pass Getting an employment pass can be a long process, but harsh penalties apply for those who are caught without a valid pass. A work pass is usually valid for six months to five years. In general, applicants must be over 23 years old (for the IT sector) and 27 years old for all other sectors. In addition to these work visas, foreigners can apply for the Malaysia My Second Home (MM2H) Programme. Applicants accepted on the scheme are granted a multiple-entry Social Visit Pass which is valid for ten years in the first instance and is renewable. It is open to everyone regardless of age and foreigners with a pass can bring their partners, and children up to the age of 21, with them. Those granted a pass via the MM2H scheme can set up a business in the country and work part-time. Full details of the scheme, the entitlements it brings, how to apply and information on living in the country can be found on the MM2H website. All the necessary forms to make an application can also be downloaded.

9 19 Tax & Social Security Tax Budget 2014 was announced in October 25, As expected, GST was introduced in the budget and it is scheduled to be implemented in In line with the implementation of GST, the government has also reviewed the personal income tax rates. Here are some of the key highlights: 1. Personal income tax rates is set to be reduced by 1 to 3 percentage points for all tax payers. We expect the reduction to apply for all income group brackets but the final rate of deduction is to be finalized by LHDN. 2. Chargeable income group to be increased from exceeding RM 100,000 to exceeding RM 400, Maximum tax rate to be reduced from 26% to 24% 4. Tax rate to be reduced from 19% to 16% for chargeable income group of between RM 50,000 to RM 70, Special tax relief of RM 2,000 for those with a monthly income of up to RM 8,000 for year 2013 only. This will result in a tax savings of RM 480 for each tax payer 6. Tax payers are no longer required to submit their annual tax returns if their salaries are already being deducted under the MTD (Monthly Tax Deduction). Tax payers are to submit their annual returns because the MTD is just an estimation of tax payable and most of the time, tax payers are paying more than what they are expected to without taking into consideration the tax reliefs that each individual tax payer is entitled to. All measures announced above will be effective in the year 2015 assessment Social security The Malaysian Social Security system is called SOCSO, or PERKESO (Pertubuhan Keselamatan Sosial). It provides financial assistance to employees and their families in the event of an accident which results in death, disability or illness, or an occupational disease. SOCSO provides two kinds of insurance: 1. Employment injury insurance 2. Invalidity pension scheme Only Malaysian citizens and permanent residents are eligible to contribute to SOCSO and to benefit from its services. The following individuals are exempt from paying SOCSO: Business owners and their spouses Domestic servants Foreign workers Government employees Self-employed people SOCSO is funded by contributions from both the employer and the employee. The amount paid into the scheme depends on an employee's earnings. Tax reporting year The tax year in Malaysia is from 1 January to 31 December. Income tax returns must be filed before 30 April of the following year.

10 110 Payslips Employers must provide employees with a payslip each month. Each month, the payslip should include a detailed list of all deductions to the employee s salary including taxes, social insurance and voluntary contributions. Compliance Starters/Registration An employer s obligations for managing new starters is as follows: Establish a formal employment contract directly with each employee; Compile and provide employee personal demographic details, employment details, payment details (monthly salary) preferably statutory details ( employee tax ID), EPF ID and SOCSO ID sign off registration forms and submit (only applicable for employees with no existing EPF, SOCSO and tax numbers), KWSP 3 (Application For Member's Registration and Amendment Of Member's Particulars for EPF), Borang 2 (Registration of new starters with the Social Security) and CP22 (New employee income tax registration notice). It is the employer's responsibility to ensure that their employees are registered with SOCSO; a new employee must be registered within 30 days of starting work. Coverage under the SOSCO system is optional for employees earning more than RM 3,000 per month. Leavers/De-registration An employer s obligations for managing leavers is as follows: Provide Ceridian with leaver s name and employee number, date and cessation reason, any additional payments due to the employee such as pro-rated bonus, leave encashment, etc.; Sign-off Form CP21 (Notification by Employer of Departure from Country of an Employee) and Borang 3; Inform the employee that he/she must withdraw EPF contributions before he/she leaves the country; For employees who are about to depart from Malaysia after the cessation of employment, advise Ceridian the amount to withhold from employee s net salary (if applicable); Withhold all monies due to a foreign employee upon cessation, until Internal Revenue Board of Malaysia (IRBM) notifies the Customer of the amount of taxes due; Make tax payments to IRBM with monies that were withheld from foreign employee and return the balance to employee; File the Form and retain all tax payment receipts for non-citizens. Data Retention Employers must maintain original employees and payroll documents, including key payroll register reports and statutory reports Tax Listing (CP39), EPF Listing (KWSP6), Retirement Fund and SOCSO Listing (Borang 8A) for a minimum of ten (10) years or as required by the local law. Electronic storage is acceptable.

11 111 Statutory Absence/Payments Annual leave Every employee is entitled to ten out of any of the gazetted public holidays (four of which shall be the National Day; the of the Yang di-pertuan Agong, the of the Ruler of the State and the Workers Day) and any day declared as a public holiday by the Federal/State Government under S.8 of the Holidays Act 1951 in any one calendar year. As for annual leave, in accordance to the Employment Act, 1955, an employee is entitled to the following amount of paid annual leave:- 1 to < 2 years 8 days 2 to < 5 years 12 days 5 years - 16 days. The employer shall grant and the employee shall take such leave not later than twelve months after the end of every twelve months continuous service and any employee who fails to take such leave at the end of such period shall thereupon cease to be entitled thereto: provided that an employee shall be entitled to payment in lieu of such annual leave if, at the request of his employer, he agrees in writing not to avail himself of any or all of his annual leave entitlement. Maternity leave As long as you have worked for your employer for at least 90 days in the four months before starting maternity leave. Under the 1955 Employment Act, you are then entitled to at least 60 consecutive days of maternity leave at full pay. Your employer cannot fire you or give notice of termination during your maternity leave. In some cases, you may be entitled to more than the statutory two-month maternity leave: mums in the civil service can apply for additional five years of unpaid leave after their maternity leave; banks and some state government employees also enjoy 90 days of maternity leave; some multinational companies provide even more than 90 days of maternity leave. Maternity benefits generally apply to the first five children, under the law, you will not be entitled to maternity leave for a sixth child and any subsequent children. Under the law, you are also not entitled to maternity leave after adopting a child however some employers are starting to offer this on a case by case basis. Paternal leave Unlike maternity leave, there is no law that actually requires employers to provide paternity leave. As such, although the overwhelming majority of employers in Malaysia do allow paternity leave, some are more generous than others. So how much paternity leave allowed depends entirely on the employer.

12 112 In general; Malaysian civil servants are entitled to seven days' paternity leave; some state government employees can take up to 14 days. Some companies only provide one to three days of paternity leave. On the more generous end of the spectrum, some multinationals allow male employees up to 14 days to a month. Many companies also allow new dads to take unpaid leave, compassionate leave or use their annual leave for this purpose. Sickness The number of days of paid sick leave which an employee is entitled to in each calendar year is as follows:- 1. Less than 2 years 14 days 2. 2 to <5 years 18 days 3. > 5 years 22 days.