How To Register Employee PCB Deduction?

In Malaysia, the acronyms MTD and PCB stand for Monthly Tax Deductions (MTD) and Potongan Cukai Bulanan (PCB). These same names mean the same thing, but one is in English, and the other is in Malay. Confusion arises because many working people believe that their income tax payments have already been taken care of by the PCB monthly deductions from their wages and that taxes are not required to be paid further. This is a popular misunderstanding, as PCB deductions are usually insufficient and do not cover the overall tax amount owed by taxpayers.

How do I register and submit my monthly tax deductions (PCB) in Malaysia?

PCBs and MTDs are income tax deduction mechanisms that deduct a certain amount from an employee's current remuneration package. These deductions aim to reduce the financial burden placed on employees whenever the actual tax amount is determined. PCB is deducted from employees' salaries, and the employer should ensure that the appropriate amount is deducted. The amount deducted from the earnings will then be remitted to the Inland Revenue Board by the employer or company on the 10th of the following month.

Certain procedures must be followed to register and submit monthly tax deductions in Malaysia. This particular aspect will be highlighted throughout this piece of content. Before delving into the main topic, it should be acknowledged that there are numerous misconceptions about PCB or MTD. Many Malaysian employees believe their PCB or MTD has been deducted naturally from their monthly income before the final payment date. Because the MTD has already been deducted from the earnings, no additional taxes are due. The reality is that MTD is only a portion of the tax, and a taxpayer is required to pay the remainder of the actual income tax implied by the monthly salary.

The following are the requirements for an employee to pay income tax in Malaysia:

• Individuals who earn a regular income and are taxed

• One who makes a steady income from their own business

• Employees are paid a monthly salary and PCB or MTD at regular intervals

• Employer tax returns are required for just about any company owner who employs others

• Each and every company that hasn't been registered by IRBM yet for the company that has not yet been registered by IRBM

The registration process for PCB or MTD in Malaysia

PCB is deducted from employees' monthly paychecks. Previously, there were some concerns and misunderstandings about the transparency of employers' appropriate submission of PCB and additional deduction rate from employees' monthly salaries. Things have become more transparent since the introduction of e-PCB or e-CP39.

The online application is far more dependable and time efficient than the manual system form process. When questioned by the Inland Revenue Board, an employer or company must reveal any employee's monthly slips and documents of MTD or PCB rates of return. The report of the remitted amount deducted from an employee's monthly salary must be submitted within 10 days of the following month of investigation.

Payment Methods of the Inland Revenue Board

Malaysian employers have several options for declaring MTD payments to the Malaysian Inland Revenue Board. Employers can make the necessary payments using flash drives, CDs, diskettes, e-payment facilities, or manual payments using Forms CP39 or CP39A.

• Manual Payment - Manual payments can be made manually by the employer by submitting Forms CP39 or CP39A to the Inland Revenue Board of Malaysia's payment counter. Forms may be original, photocopied, or computer-generated. Manual payments can only be made electronically with Form 39 or CP39A at counters in Kuala Lumpur, Kota Kinabalu, and Kuching payment centres.
• Payments by Removable Disk - MTD payment transactions can also be made at all CIMB Bank and Public Bank Berhad branches in Malaysia as long as the data text file format complies with the Inland Revenue Board of Malaysia's CP39 format data. The document should only be saved on a removable disk for payment purposes. Employers who pay by removable disk, especially first-time payers, should have sent in a sample of the data CP39 format on a diskette along with hard copies of the list of MTD deductions for experimental purposes. An approval letter will be issued for a successful application, and a rejection letter with a report will be issued for an unsuccessful application.
• Payments Online - MTD payments can also be made online through FPX for FPX members or through the respective online banking accounts. Employers must be aware that MTD online payments for e-PCB and e-Data PCB are only made via the FPX medium by accessing the e-PCB or e-Data PCB website.

What Happens If Your Payment Is Delayed?

Employers who fail to submit payments by the 15th of the subsequent month may be fined, with a minimum fine of RM200 and a maximum fine of RM20,000, or up to 6 months imprisonment, in some cases. Employers who fail to deduct MTD payments or deduct them and even fail to submit them to the Inland Revenue Board of Malaysia may be prosecuted in a civil court of law.

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