Payroll is a crucial aspect of managing human resources and finances in a business. Keeping track of employee compensation and benefits, taxes, and other deductions can be a complex process, especially in Malaysia, where there are specific regulations and laws that need to be adhered to.
To help you stay on top of your payroll obligations, we have compiled a list of 5 frequently asked questions about payroll in Malaysia. Understanding these important payroll details will help ensure your business operates smoothly and remains compliant with local regulations.
1. What is the minimum wage in Malaysia?
Under the gazetted Minimum Wage Order (MWO) 2022, Malaysia officially increased the minimum wage to RM1,500 for all workers starting from 1 May 2022 onwards.
2. What are the statutory contributions for employees and employers?
Employees can contribute between 9–11% of their monthly salary, whereas the employer contribution is fixed at 12%.
3. What is the process for calculating income tax for employees in Malaysia?
Determine taxable income by subtracting allowed deductions from total income
Calculate the tax owed using the tax brackets and rates provided by the Malaysian Inland Revenue Board
Deduct any tax reliefs or tax rebates for which the taxpayer is eligible
The final amount is the taxable income for the year
4. What is the frequency of payroll processing in Malaysia?
The payroll cycle in Malaysia is generally monthly, with payments made on the last working day.
5. What documentation is needed for payroll processing?
Income Tax Reference number
Immigration Info where applicable