How to Register & Submit Monthly Tax Deductions (PCB) in Malaysia
MTD and PCB are the commonly used acronyms which stand for Monthly Tax Deductions (MTD) and Potongan Cukai Bulanan (PCB) in Malaysia. The names mean the same thing, except one is in English and other is in local Malay dialect. Confusion tends to occur because many working individuals think that their income tax payments have already been taken care of through the PCB monthly deductions from their salaries and because of this, taxes do not need to be paid any further. This is a common misconception, as the PCB deductions are usually inadequate and will not cover the actual tax amount which is payable by the tax payees.
PCBs and MTDs is an income tax deduction mechanism, where a certain amount is deducted from the employee’s current remuneration package. The purpose of these deductions is to minimize the financial burden on the employees of paying a lump sum when the actual tax amount has been determined.
PCB is deducted from the employees’ salary, and it is the employer’s responsibility to ensure that the necessary amount is deducted accordingly. The employer or the company in question will then remit the amount deducted from the salary to the Inland Revenue Board by no later than the 10th day of the following month.
Inland Revenue Board’s Payment Methods
Malaysian employers have several options provided to them in terms of making MTD payments to the Inland Revenue Board of Malaysia. Employers are able to make the necessary payments through pen drives, CDs, diskettes, e-payment facilities or by making manual payments through Forms CP39 or CP39A.
Manual Payment – Manual payments can be made by the employer though the submission of Forms CP39 or CP39A at the payment counter of the Inland Revenue Board of Malaysia. Original, photocopied or computer-generated forms are also acceptable. Manual payments can only be made through electronic mediums together with Form 39 or CP39A at counters in the Kuala Lumpur, Kota Kinabalu and Kuching payment centers only.
Payments Using Diskette – MTD payments can also be made at all branches of CIMB Bank and Public Bank Berhad in Malaysia, as long as the format of the data text file is compliant with the format data of CP39 as outlined by the Inland Revenue Board of Malaysia. For payment purposes, the text file must only be saved on a diskette. Employers who are paying via the diskette method, especially for first time payers, are highly advised to send in a sample of the data CP39 format in a diskette together with a hardcopy of the list of MTD deductions for testing purposes. A successful application will be issued with an approval letter, and an unsuccessful application will be issued with a rejection letter accompanied by a report.
Payments Online – MTD payments can also be made online either via FPX for those who are members of the FPX, or by directly logging into the respective internet banking accounts. Employers should note that MTD online payments for e-PCB and e-Data PCB can only be made through the FPX medium by logging onto the e-PCB or e-Data PCB website.
What Happens If Payments Are Delayed?
Employers who fail to remit payments before the 15th of the following month are liable to being fined, and the minimum fine would be RM200 and no more than RM20,000 or up to 6 months imprisonment or in some instances, both.
If employers do not deduct the MTD payments, or deduct the payments but fail to remit them to the Inland Revenue Board of Malaysia, the employers can be prosecuted in a civil court of law.