- New schedule of montly tax deductions Employees are now allowed to claim rebates for personal relief every month
- Changes to the STD calculation formula
- Reduced minimum monthly deductios
- Inclusion of Benefit-in-kind (BIK) and Value of Living Accommodation (NTK) as part of remuneration
- Changes in additional renumeration formula
What does this all mean to employees and employers in Malaysia?
- Higher amount of PCB deduction compared to 2008. Reasons :-
a) In 2008, a 20% discount was given for monthly PCB. This resulted in many employees having to pay the balance when they submit their tax forms.
b) In 2008, the PCB was calculated at the lower end of the range of salary, in 2009, it is calculated at the mid-range. For example, if your salary is between RM2,700 – RM2,750, in 2008, PCB was calculated as if your salary was RM2,700. In 2009, PCB is calculated as if your salary is RM2,725.
- Employees can ask employers to deduct less PCB or more PCB by submitting Borang TP1 (less deduction) or TP2 (more deduction). Employees who has additional tax deductions and rebates allowed by the Income Tax Act can submit Borang TP1 to their employers. These dedcutions and rebates are listed in Additional Tax Deductions Available for Individuals.
- Employers has final say whether to approve or reject the requests of Borang TP1 or TP2.
- New PCB tables to follow.
- Old PCB tables can still be used up to Match 2009.
- Can accept or reject Borang TP1 or TP2 requested by employees. Borang TP1 need not be accompanied by any official receipts but employers who accept to reduce the PCB deductions based on TP1 must keep the Borang TP1 for 7 years for audit purposes. The employees have to justify the reduction request themselves during an audit.
- In the month of bonus or any additional salary payment, employers have to recalculate every employee’s PCB using the PCB calculator available in the IRB’s website to determine the amount of PCB to deduct. This is a very time consuming process and even the IRB officers have admitted that this is not practical. The only way out is to buy a software that already has this feature incorporated in (eg. UBS Payroll software). Alternatively, employers have to wait for IRB’s own in-house developed software called e-PCB to be releassed. No date has been fixed for the release as it is being tested by 30 ‘chosen’ employers to get feedback.
The reason for this change is mainly to try to have the PCB deductions as close to the final tax as possible so that it can reduce the IRB's work in refunding over-payments.
This will not work because it is nearly impossible for the PCB deductions to add up to the exact final tax of anyone. If there is over-payment, the IRB will still have to refund taxpayers. If there is under-payment, taxpayers will still have to pay uo when filing their tax returns. The amount may be smaller but the work is still the same.