Recognized by LHDN, HR Forte simplifies Malaysian payroll compliance.
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EPF, SOCSO, and EIS contributions
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Monthly tax deductions (MTD/PCB)
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Automated eLeave, eClaims, and payslips
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Compliance-backed payroll calculations
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What Employers Need to Know About Payroll in Malaysia
Payroll in Malaysia requires employers to calculate and report statutory contributions, monthly tax deductions, and employee entitlements in accordance with regulations issued by LHDN, EPF, SOCSO, and EIS. Payroll accuracy depends on correct salary classification, statutory thresholds, and timely submissions.
Key Payroll Components in Malaysia
Statutory Contributions
Employers in Malaysia are required to manage multiple statutory contributions:
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Employees Provident Fund (EPF)
Employer and employee contributions based on statutory rates and salary thresholds. -
Social Security Organisation (SOCSO)
Coverage depends on salary band and employee eligibility. -
Employment Insurance System (EIS)
Mandatory for eligible employees to provide income replacement support.
Contribution rates and thresholds may change and must be applied correctly for every payroll cycle.
Monthly Tax Deductions (MTD / PCB)
Malaysia operates a Monthly Tax Deduction (MTD/PCB) system, where employers withhold income tax at source.
Key considerations:
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Tax deductions are calculated based on income level and relief eligibility
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Adjustments may be required for bonuses, variable pay, or leave deductions
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Incorrect MTD calculations can lead to under- or over-withholding
Payroll Filings and Reporting Obligations
Employers must ensure timely submissions to the relevant authorities, including:
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Monthly EPF, SOCSO, and EIS contributions
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Monthly PCB submissions to LHDN
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Year-end tax forms and reconciliations
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Employee payslip issuance and record retention
Late or incorrect submissions may result in penalties or audit exposure.
Common Payroll Challenges in Malaysia
Many employers face recurring payroll issues due to:
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Manual or spreadsheet-based payroll processing
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Incorrect application of statutory contribution ceilings
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Errors in PCB calculations for variable income
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Lack of audit trail for payroll adjustments
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Difficulty tracking regulatory changes
These issues increase compliance risk and administrative workload.
How HR Forte Supports Malaysian Payroll Compliance
HR Forte supports payroll operations in Malaysia by:
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Applying EPF, SOCSO, and EIS rules consistently
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Automating MTD/PCB calculations based on payroll data
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Integrating payroll with attendance, leave, and claims
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Providing compliance-backed payroll calculations
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Maintaining structured payroll records for audits
Payroll workflows are standardised and traceable to reduce dependency on manual processes.
Need clarification?
What statutory contributions are required for payroll in Malaysia?
Employers must manage EPF, SOCSO, and EIS contributions in accordance with statutory rates and eligibility rules.
Is income tax deducted monthly in Malaysia?
Yes. Employers are required to withhold Monthly Tax Deductions (MTD/PCB) from employee salaries and submit them to LHDN.
Do payroll rules in Malaysia change frequently?
Yes. Contribution rates, thresholds, and tax rules may be updated and must be monitored regularly.
Can payroll errors lead to penalties in Malaysia?
Yes. Incorrect deductions or late submissions may result in fines, penalties, or audit inquiries.
How can employers reduce payroll compliance risk in Malaysia?
By using payroll systems that apply statutory rules consistently and maintain clear audit trails.
Why HR Forte in Malaysia?
Malaysia’s payroll requires accurate statutory contributions and frequent updates. HR Forte automates EPF, SOCSO, EIS, and tax deductions — ensuring compliance and timely filings every month.