Monthly Tax Deductions (MTD)
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What Is Monthly Tax Deductions (MTD)?
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| Monthly Tax Deductions (MTD), also known as Potongan Cukai Bulanan (PCB) in Malay, is a mechanism in which employers deduct monthly tax payments from the employment income of their employees. This mechanism is designed to avoid the issues that come with requiring payment of a large sum of income tax when the actual tax amount has been determined. |
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| Employee shall provide their personal data to employers by Form TP1 (Individual Deduction And Rebate Claim Form). Therefore, these monthly deductions are net of all possible tax relief, tax rebate and zakat payments. |
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Started from Malaysia income tax year of assessment 2014 (tax filed in year 2015), employees are not required to file their income tax return if such Monthly Tax Deductions (MTD) constitute their final tax. However, there are some criteria must be met:
- Your only source of income is your employment income;
- Your employer has been deducting Monthly Tax Deductions (MTD) from your salary, correctly;
- You have been working for 12 months in the calendar year with the same employer;
- Your employer is not paying any of your taxes for you; and
- You have not opted for a joint assessment with your spouse.
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| If you meet the above conditions and have not submitted a tax return by the deadline for submission (April 30th) you will be deemed to have made an election not to submit a return. |
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Employer's Responsibilities
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Employer's responsibilities under the Monthly Tax Deductions (MTD) Rules are as follows:
- Deduct the Monthly Tax Deductions (MTD) from the remuneration of employee in each month or the relevant month in accordance with the Schedule of Monthly Tax Deductions or Computerised Calculation Method and pay to the Director General.
- Make additional deductions from employee's remuneration in accordance with the direction given by the Director General under Rule 4 of Monthly Tax Deductions (MTD) Rules.
- Employer shall pay to the Director General, not later than the fifteen day of every calendar month, the total amount of tax deducted or should have been deducted by him from the remuneration of employees during the preceding calendar month.
- Furnish a complete and accurate employee’s information of the following in a return when submitting Monthly Tax Deductions (MTD) payments/additional deductions:
- income tax number (if any);
- name as stated on identity card or passport;
- new and old identity card number/police number/army number or passport number (for foreign employee); and
- Monthly Tax Deduction (MTD)/additional deductions amount.
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How to Pay Monthly Tax Deductions (MTD)?
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| There are several options to pay Monthly Tax Deductions (MTD) to the Inland Revenue Board of Malaysia. |
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Manual Payment
Manual payments can be made by the employer though the submission of Forms CP39 or CP39A at the payment counter of the Inland Revenue Board of Malaysia. Original, photocopied or computer-generated forms are also acceptable. |
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| Employers also can post Forms CP39 or CP39A with cheque to Inland Revenue Board of Malaysia. Postdated cheques and cheques issued by banks outside Malaysia will not be accepted. Please do not send cash through the post. Cheque/bank draft has to be submitted to Kuala Lumpur Payment Centre, Jalan Tunku Abdul Halim or collection unit in Kuching or Kota Kinabalu. |
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Payments Using Diskette
Monthly Tax Deductions (MTD) payments can also be made at all branches of CIMB Bank and Public Bank Berhad in Malaysia. The Monthly Tax Deductions (MTD) information must be saved in a diskette with format outlined by the Inland Revenue Board of Malaysia. |
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Payments Online
Monthly Tax Deductions (MTD) payments can also be made online either via FPX for those who are members of the FPX, or by directly logging into the respective internet banking accounts. Employers should note that Monthly Tax Deductions (MTD) online payments for e-PCB and e-Data PCB can only be made through the FPX medium by logging onto the e-PCB or e-Data PCB website. |
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What We Can Help You?
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| Payroll can be a real headache for every size of business from one man or woman bands through to large companies. Just because you only have a few employees doesn’t mean that you’ll find payroll simple. |
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| Staying up to date with ever-changing payroll legislation can be a real challenge, but you don’t have to work that way. When you choose to outsource your payroll to us, you can rest assured that your payroll is in safe hands. |
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| Themis will provide you with assistance regarding Malaysia laws and regulations as well as payment facilities. When you choose to work with us, you can rest assured that you are working within the Malaysia regulations. |
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| Our professional staff will assist our clients with: |
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- The preparation and submission of all forms and returns on a timely basis;
- The computation of payroll whilst ensuring all necessary deductions have been deducted;
- Pass the payroll information to person in charge of business account;
- Advice on the rules and regulations update related to payroll.
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