The Inland Revenue Board of Malaysia (IRBM) has announced updates to the monthly tax deduction regulation for 2023. As a result, there will be changes to income tax rates and tax reliefs for certain types of expenses.
The article will cover the following:
- Changes to Income Tax Rates
- Expansion of scope on tax relief
- The general guideline on Termination Of Service (updated in May 2023 by IRBM)
Changes to Income Tax Rates (The changes are in bold)
| Chargeable Income (RM) | Current Tax Rate (%) |
New Tax Rate (%) |
| 0 – 5,000 | 0 | 1 |
| 5,001 – 20,000 | 1 | 1 |
| 20,001 – 35,000 | 3 | 3 |
| 35,001 – 50,000 | 8 | 6 |
| 50,001 – 70,0000 | 13 | 11 |
| 70,001 – 100,000 | 21 | 19 |
| 100,001 – 250,000 | 24 | 25 |
| 250,001 – 400,000 | 24.5 | 25 |
| 400,001 – 600,000 | 25 | 26 |
| 600,001 – 1,000,000 | 26 | 28 |
| 1,000,001 – 2,000,000 | 28 | 28 |
| Over 2,000,000 | 30 | 30 |
Expansion of scope on tax relief
| Income Tax Relief Item | Scope of Relief |
| Medical treatment expenses increased from RM 8,000 to RM 10,000. | Includes intervention expenditure for Autism, Attention Deficit Hyperactivity Disorder (ADHD), Global Developmental Delay (GDD), Intellectual Disability, Down Syndrome and Specific Learning Disabilities limited to RM 4,000 for : i) Diagnostic assessment certified by a medical practitioner registered with the Malaysian Medical Council ii) Early intervention and rehabilitation programs conducted by health profession practitioners registered under the Allied Health Profession Act 2016 Tax relief also includes the following treatment: • Dental treatment & examinations performed by dental practitioners registered with the Malaysian Dental Council and limited to RM 1,000 • Serious illness for the taxpayer, spouse, or child • Fertility treatment for taxpayer or spouse • Vaccination for the taxpayer, spouse, or child limited to RM 1,000 • Full medical check-up, mental health check-up or consultation, COVID-19 detection test including the purchase of self-test kit for the taxpayer, spouse or child limited to RM8,000 • COVID-19 detection test expenses for: i) COVID-19 test performed in a clinic/hospital supported with receipt issued by the clinic/hospital / a medical practitioner registered with the Malaysian Medical Council ii) Purchase of self-detection test kit supported with a receipt iii) Tests carried out in a laboratory recognized by the Ministry of Health, Malaysia |
| Existing relief for life insurance premiums expanded to include voluntary EPF contributions | Relief of RM 3,000 per year from YA 2023 |
| Extension of tax relief for child care fees paid to registered child care centres/kindergartens for a child aged 6 years and below | Relief of RM 3,000 is extended until YA 2024. |
| Extension of tax relief on net deposit into the skim SIMPANAN PENDIDIKAN NASIONAL (SSPN) | Relief of RM 8,000 is extended until YA 2024. |
| Electric vehicle (EV) charging facilities' expenditure | Tax relief of RM 2,500 is to be given to a resident taxpayer for payment of the following expenditure: • The cost of installing an electric vehicle charger • Purchase on hire purchase of vehicle chargers • Vehicle charger rental OR • Electric vehicles charging facility subscription fee relief was granted for YA 2022 until YA 2023. |
| Domestic tourism expenditure relief is removed | Relief of RM 1,000 is removed from YA 2023 |
| Personal deduction for parental care and medical treatment expenses is removed | Relief of RM 1,500 per parent is removed from YA 2023 |
| Tax relief for purchasing personal computers, tablets or mobile phones in 2020 or 2021 is removed. | Relief of RM 2,500 per year is removed from YA 2023 |
| Tax relief for SOCSO Contribution expanded to include EIS contributions | RM 350 per year |
| Tax Relief for Private Retirement Scheme (PRS) premium payments | RM 3,000. Relief extended to YA 2025. |
The general guideline on Termination Of Service (updated in May 2023 by IRBM)
Cessation of employment, termination of employment, or cessation by reason of death:
- If an employee who is or is likely to be subject to tax on income from the current employment is about to be terminated, or if an employee dies, Remote is obligated to provide Form CP22A not less than 30 days before the cessation of employment or not more than 30 days after being informed of the death as an employer.
Note: The form is not required where the employee’s income has been subject to MTD or where the employee’s monthly remuneration is below the minimum amount of income that is subject to MTD, as long as they will continue working or not retire from any employment in Malaysia. (MTD is a monthly deduction that contributes towards payment of employee income taxes at the end of the financial year.) - The table below shows a general guide on whether Form CP22A is required in each scenario:
- If severance pay and/or notice pay are involved in an employee's termination, the employee must file a CP22A form. Employers are authorized to hold the employee's final/last pay until they receive a Clearance letter from the Tax Authority. This is to ensure that no amount due by the employee needs to be paid to the tax authority.
If the employee is leaving Malaysia for more than 3 months
- If the employee earned income that is subject to tax and is planning to leave Malaysia for a period exceeding 3 months, they must request Form CP21 via help@remote.com at least 30 days before the expected departure date.
Note: The form is not required if the Inland Revenue Board of Malaysia (IRBM) recognizes that the employee frequently travels outside the country as part of their job. - The table below is a general guide for employers to determine whether forms CP21 notification is required to be submitted:
Please visit the LHDN website to read the full details.
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