Payroll Cycle in Malaysia

Payroll management is essential, especially for businesses with entities in a foreign country or region.  

As an experienced payroll service provider, TG Group has compiled some info on Payroll Requirements in Malaysia: 

In Malaysia, payroll runs on a monthly cycle, and salaries must be deposited by the 7th of every month via cash, cheque, or bank credit. Companies handle payroll in-house or outsource it to a third party if time and resources are limited. 

Here are some points to take note of when managing payroll. 

Computation of salary

The gross pay includes the basic income and various benefits, including overtime and travel allowance. Each item should be calculated accurately to avoid errors in the sum of paid-out salary for the month. 

Issuing payslips

Payroll regulations in Malaysia require employers to issue payslips to their employees in hardcopy or electronic format. The payslips must contain all information about the employee’s salaries, claims, deductions, and allowances. 

Statutory deductions/contributions

The payroll deductions practised in Malaysia include income tax under the monthly tax deduction (MTD) system, Social Security and Employee Provident Fund (EPF), and Employee Insurance Scheme (EIS). Both employers and employees need to contribute towards the levies and taxes. 

In Malaysia, employers withhold tax on employment income under the pay-as-you-earn (PAYE) scheme for remittance to the tax authorities. All tax deductions are made on a PAYE basis. 

‍Remittance of payment

Remitting payment to the relevant authorities is crucial in the Malaysian payroll process. Thus, your payroll employee must know the respective contribution scheme deadlines and available payment methods to avoid late charges.

If the abovementioned requirements look like an administrative burden to your company, outsourcing your payroll process is a great solution.


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