If you want last month's salary to be credited to your account and not withheld by the Internal Revenue Office, please read these guidelines on how to do tax settlement in Malaysia for expats and local Malaysians.
What is a Tax Clearance?
A tax assessment is a certificate or letter from the Malaysian Revenue Agency (LHDN) saying that you owe or do not owe any outstanding income tax.
Upon receipt of this letter, your employer will release the balance of any monies withheld from you after paying outstanding taxes (if any) as shown on the tax settlement letter / certificate. This money can be your salary, overtime pay, tip, or compensation owed to you.
The Tax Settlement Letter or Certificate (Surat Penyelesaian Cukai, SPC) applies to both Malaysians and expatriates or foreign workers.
Who Needs to Apply for Tax Clearance?
You must request a tax clearance or settlement if you retire, leave employment at the end of a contract, resign, terminate your employment, or leave Malaysia for a period of more than three months. When a taxpayer dies, his closest relatives must file an application.
When to request the tax settlement?
In order for LHDN to expedite the issuance of the Tax Settlement Letter, you must request it 30 days BEFORE the expiration of your employment contract, your date of resignation or termination of employment, or the date of your departure from Malaysia.
In the event read more here of death, family members must submit the application within 30 days of the date of death.
How to request a tax assessment?
To request a tax estimation settlement, have your employer (usually the human resources department) complete one of the following forms:
-Form CP21 (if you leave the country)
-Form CP22A (for retirement, resignation or termination of employment if working in the private sector)
-Form CP22B (for retirement, resignation or termination of employment if you work in the public sector).
In the event of death, the beneficiary of the deceased taxpayer must inform the taxpayer's employer; then make sure the employer informs LHDN immediately of the death.
To expedite the issuance of the Tax Settlement Letter, be sure to submit the most recent tax return form. This will update the current status of your tax assessment.
Filing can be done online through e-SPC (employer only) or manually through the LDHN office that handles your income tax file.
What happens if your tax settlement request is delayed?
The delay in filing the tax assessment request may be subject to penalties. Although LDHN will take care of the employer, it is also their responsibility to ensure that this does not happen. And by doing so, he will get money owed as soon as possible.
So what is the penalty?
The sanction will consist of fines of between MYR 200 and MYR 20,000 and prison terms of up to six months.
LHDN may take legal action against an employer who fails to pay the outstanding tax under the Tax Settlement Letter. So this is no laughing matter.