Great news – your business is doing well, and you have employees on your payroll. What’s next? As an employer, it is your responsibility to assist your employees with their monthly tax deductions and annual tax preparation. That’s where you will find familiarity in the EA Form and Form E for Malaysia income tax filing.
Here, we’ll discuss the purposes of the 2 forms and how to go about ensuring compliance to the employment laws and regulations.
What is EA Form in Malaysia?
EA Form is a statutory document that details the Statement of Remuneration from Employment. This means that it will highlight all the earnings from an employer during the tax assessment period.
With EA Form, it allows the employees to easily have a snapshot of how much they have earned during the year for accurate declarations to submit to the tax organisation in Malaysia – LHDN.
Here are the items that you need to compute to fill up the EA Form in Malaysia accurately:
- Gross salary
- Overtime pay
- Commissions
- Bonus
- Gratuities
- Allowances
- Benefits-in-kind
- Value of Living Accommodations (VOLA)
- Pensions
- Compensation for loss of employment
- Total deductions (MTD)
The EA Form does not need to be submitted to LHDN, but instead, it is required to be shared with the employee for the purpose of their tax filings. The consequences of not preparing the EA Form are a fine of up to RM20,000, imprisonment not exceeding 6 months, or both. Hence, it’s very important for employers in Malaysia to prepare this in advance to avoid late submission to employees.
To get the EA Form, you can download it from the LHDN website here.
What is the Form E in Malaysia?
The Form EA is prepared for the employees – so what form is required to declare from the employers’ side? That’s where Form E comes in.
Form E in Malaysia underlines the key statistics that employers need to report to LHDN when it comes to taxation matters. These include:
- Number of employees hired
- Total remuneration
- Total amount of tax deductions for the year
While not every employer is required to submit the Form E to LHDN, it is encouraged by the organisation to do so. The type of companies exempted from Form E submission includes:
- Sole proprietors (with no employees)
- Partnerships (with no employees)
All other business entities such as private limited (Sdn. Bhd.) and public limited (Bhd.) companies are required to file Form E. Similar to Form EA, all employees under your payroll for the year must be included in Form E.
To submit Form E, you will need to login to LHDN portal or use a LHDN-approved payroll software. There are no manual submissions for Form E. If employers fail to submit the form by the deadline, they may face a fine of up to RM20,000, imprisonment not exceeding six months, or both.
You can find have a look at the Form E directly from the LHDN website here.
