Tax Clearance in Malaysia
What is a Tax Clearance ?
Employees are required to obtain a tax clearance letter / certificate (in Malay it is known as Surat Penyelesaian Cukai [SPC]) from the Inland Revenue Board of Malaysia (IRBM) when they are resigning from their employment, employees include locals or expatriates / foreign employees.
However, this does not include foreign workers because the relationship of a master and servant does not subsist.
Meanwhile, such tax clearance letter / certificate is important for an employer whether to withhold any salary from the employees and remit to the IRBM before making a full salary to his employee.
Procedures
Usually an employer will prepare either one of the following in order for his employee to obtain the clearance letter :-
- Form CP21 (if the employee is leaving the country)
- Form CP22A (for retirement, resignation or termination of employment if you work in the private sector)
- Form CP22B (for retirement, resignation or termination of employment if you work in the public sector)
Failing to do so, a penalty of RM200-00 to RM20,000-00 by the IRBM and /or imprisonment of not more than six months on the employer.
The employer must ensure the right amount of tax is remitted to IRBM as stated in the clearance letter before making the balance amount to his employee.
The clearance letter usually will be issued within 10 to 14 days provided all the information required by IRBM is met and furnished.
Disclaimer
The contents of this article intends to share on a general understanding basis and are not intended to suit any particular individuals and/or organisation without further consulted professional advice. The writer shall not be held and accepts no liability or responsibility on whatsoever loss, damage, expense or cost to any party resulting directly and/or indirectly from the use, application and /or referral of this materials and /or contents and/or the reliance by any party, either in part or in whole.