Employer's Responsibilities - Retire or Cease From Employment in Malaysia

The employer is responsible for notifying IRBM at least thirty days before the date the employee ceases employment if: 

a. Employee is about to retire. 

b. Employee is subject to MTD scheme and the employer has not made any deduction. 

c. Employee is about to leave Malaysia permanently.

The employer must withhold money payable to the employee until they receive a Clearance Letter from the Assessment Branch. However, the employer is not required to send notification about the employee ceasing employment or withhold money payable to him if: 

a. Employee is subject to MTD and deduction has been made by the employer. 

b. Employee`s remuneration is less than the minimum income subject to MTD. 

c. Employer is aware that the employee is to be employed elsewhere in Malaysia.

Form Used: 

a. CP22A - Notification of cessation of employment (Employment of Private Sector Employees) 

b. CP22B - Notification of cessation of employment (Employment of Public Sector Employees)

Failure to notify IRBM will render an employer liable to prosecution and on conviction, liable to a fine of not less than RM200 and not more than RM2,000 or to imprisonment for a term not exceeding six months or to both. 

The employer will also be responsible for any tax due from the above mentioned employee.

The MTD amount is ascertained based on employees residence status.

The residence status of an individual is determined under section 7 of the Act. 

1. Public Servant or Officer of a Statutory Authority who are non-resident by virtue of: 

a. exercising his employment outside Malaysia or 

b. attending any course of study in any institution or professional body outside Malaysia which is fully-sponsored by the employer,

is deemed to be a resident for the basis year for that particular year of assessment and for any subsequent basis years when he is not in Malaysia.

Income from sources outside Malaysia received by persons in (a) or (b) above is exempted from income tax in Malaysia according to the Act.

2. Non Resident Employee - MTD of an employee who is non-resident or not known to be resident in Malaysia shall be calculated at the rate of 26% of his remuneration.

Example: 

Employee is not resident in calendar year 2018. 

Total monthly remuneration: RM3,000.00 

MTD Calculation:

RM3,000.00 x 28% 

Total MTD = RM840.00

3. Resident Employee - MTD of an employee who is resident or known to be resident in Malaysia is derived after deducting all allowable deductions under the Act.

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Edited by: 浪子

Bibliography

Inland Revenue Board of Malaysia. (2016). Retire or Cease From Employment. Retrieved from http://www.hasil.gov.my/bt_goindex.php?bt_kump=50&bt_skum=1&bt_posi=1&bt_unit=3&bt_sequ=3&bt_lgv=2