Steps to Ensure That Your Sdn. Bhd. Is Legally Compliant and Ready for Business Activities
December 15, 2025Our Blog
Employer’s Responsibilities
- Register an employer’s number (E).
- Calculate monthly tax deduction (MTD) from employee’s remuneration, submit the statement of MTD and remit the MTD amount to the IRBM on or before the 15th day of the subsequent month through e-PCB Plus on MyTax Portal.
- Submit return form of employer (Form E) together with the C.P.8D on or before 31 March of the following year, every company is COMPULSORY to submit Form E notwithstanding the company is dormant/has no employee.
- Prepare and render to an employee a statement of remuneration (Form EA / EC) in respect of that employee on or before the last day of February of the following year.
- Prepare and provide a copy of statement of monetary and non-monetary incentive payment to each agent, dealer or distributor (Form CP58) on or before 31 March of the following year.
- Prepare and submit the following form (if relevant):
No. Category Form Types Submission due date Method of submission 1 Notifcation of new employee CP22 within 30 days after commencement of employment Online, through MyTax portal using e-CP22 application. 2 Notification of cessation of employment or cessation by reason of death for an employee in private sector CP22A Not less than 30 days before cessation of employment; or Not more than 30 days after being informed of death The ORIGINAL notification form, notice on AMENDMENT or ADDITION , shall be submitted through the e-SPC application on the MyTax Portal. 3 Notification of cessation of employment or cessation by reason of death for an employee in public sector CP22B 4 Notification of employee leaving Malaysia for more than 3 months CP21 Not less than 30 days before expected date of departure
Cessation of employment or cessation by reason of death for an employee
schedule, employers are required to submit Form CP22A / CP22B through e-SPC for cases that are subject to tax clearance letter (SPC) requirements only.
| Employee's Yearly Income Subject to Tax? | Where Employee’s Yearly Income Subject to Tax | Subject for Tax Clearence? | |||||||
| No. | Service Termination Type | Scenario 1 | Scenario 2 | ||||||
| Monthly Income BELOW the Minimum Amount That Subject to MTD | Employee received compensation / gratuity from termination | Employer Has Made MTD Deduction | Employee received compensation / gratuity from termination | Malaysian Employees | Non-Malaysian Employees | Notice Type (If Yes) | |||
| 1 | Resigned / Terminated | No | No | No | |||||
| Yes | Yes | Yes | Yes | Yes | CP22A / CP22B | ||||
| Yes | Yes | No | No | Yes | CP22A / CP22B | ||||
| Yes | Yes | Yes | Yes | Yes | CP22A / CP22B | ||||
| Yes | Yes | No | No | Yes | CP22A / CP22B | ||||
| Yes | No | Yes/No | Yes | Yes | CP22A / CP22B | ||||
| 2 | Retired / Death | No | No | No | |||||
| Yes | Yes | Yes | CP22A / CP22B | ||||||
Leaving Malaysia for more than 3 months
| Employee's Scenario | Employee's Yearly Income Subject to Tax? | Subject for Tax Clearance? | Notice Type (If Yes) |
|---|---|---|---|
| Leaving Malaysia for More Than 3 Months | No | Yes | |
| Yes | Yes | CP21 |
Non-compliance by employer:
- Failure to comply with the responsibility without any reasonable excuse, upon conviction of an offence, will be liable to a fine of not less than RM200 and not more than RM20,000 or to imprisonment for a term not exceeding 6 months or to both.
- An employer shall be liable to pay the full amount of tax due from his employee. The amount due from the employer shall be a debt due to the Government and may be recovered by way of civil proceedings.
STAMPING
Stamping on Employment contract
- Employment contract is required to be stamped under the Stamp Act 1949.
- This may involve hiring an accountant or outsourcing the accounting function.
- The party who signs the contract first is responsible for paying the stamp duty, which is typically the employer.
IRB's media statement dated 6 June 2025 announced the following:
| Employment contract execution date | Stamp duty | Penalty for late stamping |
|---|---|---|
| Prior to 1.1.2025 | Ministerial exemption granted | Remitted * |
| From 1.1.2025 - 31.12.2025 | RM10 | Remitted if stamped on or before 31.12.2025 |
| From 1.1.2026 onwards | RM10 | Yes |
Based on the IRB's FAQ on Stamping of Employent contract, employment contract entered into before 1 January 2025, which is exempted from stamp duty, can be submitted to the IRB for assessment and endorsement to obtain a certificate of stamp duty exemption.
Penalty for late stamping
Contracts must be stamped within 30 days of execution (signing) if signed within Malaysia, or within 30 days of being first received in Malaysia if signed abroad.
| Timing of stamping | Penalty |
|---|---|
| Stamped within 3 months after due date for stamping | RM50 or 10% of the duty amount (whichever is higher) |
| Stamped after 3 months after due date for stamping | RM100 or 20% of the duty amount (whichever is higher) |
Self-assessment system for stamp duty (STSDS)
STSDS will be implemented in phases starting from 1 January 2026.
| Phase | Implementation date | Type of instrument/ agreement |
|---|---|---|
| Phase 1 | From 1 January 2026 | Instrument /agreement related to rental or lease, general stamping and securities |
| Phase 2 | From 1 January 2027 | Instrument of transfer of property ownership |
| Phase 3 | From 1 January 2028 | Other than those in Phase 1 & 2 |