What is EPF (KWSP)?
A portion of an employee’s salary and employer’s contribution on behalf of their workers. Every company is required to contribute EPF for their staff/workers and remit the contribution sum to KWSP before the 15th day of the following month. SQL Payroll is compatible with the labour laws and regulations in Malaysia. This makes SQL payroll the best software for all companies in Malaysia.
What is subject to EPF (KWSP)?
All remuneration in money due to an employee under his contract of service or apprenticeship whether it was agreed to be paid monthly, weekly, daily or otherwise.
| Payment that are liable for EPF contribution | Payments NOT liable for EPF contribution |
|---|---|
|
✅ Salary |
❌ Service charges |
|
✅ Commission |
❌ Retrenchment, temporary and lay-off termination benefits |
|
✅ Allowance
|
❌ Retirement benefits |
|
✅ Arrears of wages |
❌ Payment in lieu of notice of termination of employment |
|
✅ Payment for unutilised annual or medical leave |
❌ Overtime payment |
|
✅ Bonus |
❌ Gratuity |
|
✅ Wages for maternity leave |
❌ Director's fee |
|
✅ Incentive |
❌ Any travelling allowance or the value of any travelling concession |
|
✅ Wages for study leave |
|
|
✅ Wages for half day leave |
|
|
✅ Other payments under services contract or otherwise |
|
The above list is not exhaustive. Should you require further clarification, please contact EPF Contact Management Centre at 03-89226000, enquiry or any EPF Office.
EPF (KWSP) Common FAQ
If an employees’ salary below RM 5000, the employer contribution rate will automatically be set at 13%. While a salary above RM 5000 will receive employer’s contribution rate of 12%. SQL Payroll will handle this automatically.
If an employee is 60-year-old above, the employee’s EPF contribution rate will be 0% while the employer’s contribution rate is 4%, as per KWSP instructions. SQL Payroll will detect the employee’s age & assign the EPF rate accordingly.
A 75-year-old employee will have 0% contribution for EPF on both parties.
In SQL Payroll, you can even set your own EPF rate based on your company’s policies like setting the EPF rate at 19% for employees In the management level.
In SQL Payroll, you can even set your own EPF rate based on your company’s policies like setting the EPF rate at 19% for employees In the management level.
What is SOCSO (PERKESO)?
SOCSO is a social security organization that is also known as PERKESO (Pertubuhan Keselamatan Social). SOCSO to provide assistance both medically & financially to employees that have had their abilities reduced or incapacitated due to accidents or diseases. They also provide assistance to the dependants of employees if they die through pensions.
What is Subject to SOCSO?
| Type of Remuneration Subject to SOCSO | Type of Remuneration NOT Subject to SOCSO |
|---|---|
|
✅ Salary |
❌ Travelling Allowance |
|
✅ Pay Leave |
❌ EPF |
|
✅ Overtime
|
❌ Gratuity |
|
✅ Holidays |
❌ Special Expense (Claims) |
|
✅ Extra Work on Holiday |
❌ Annual Bonus |
|
✅ Commission |
❌ Other Remuneration |
|
✅ Allowance |
❌ Benefits in Kind / VOLA |
The above list is not exhaustive. Should you require further clarification, please contact SOCSO Customer Service at 1-300-22-800, enquiry or any SOCSO Office.
SOCSO Common FAQ
If an employees’ age below 60, The rate of contribution under this category comprises 1.75% of employer’s share and 0.5% of employees’ monthly wages according to the contribution schedule.SQL Payroll will detect the age of employees and automatically calculate it.
All employees who have reached the age of 60, the rate of contribution under this category is 1.25% of employees’ monthly wages, payable by the employer, based on the contribution schedule. SQL Payroll can handle this automatically for you.
Starting from the 1st of January 2019, all employers who hire foreign workers are required to register their foreign employees with SOCSO. The contribution rate for foreign workers is 1.25% of the insured monthly wagers and is to be borne by the employer.
If you are unsure your employees should be under first or second category of SOCSO, don’t worry. SQL Payroll will automatically detect the age of the employees and calculate accordingly in accordance to the SOCSO table.
In addition, for all employees who are currently 59 years old and above the age of 60 years old later, SQL Payroll will automatically calculate their SOCSO contribution in compliance to government rules without needing users to make any changes in the settings of SQL Payroll.
What is Employment Insurance System (EIS)?
EIS is a financial scheme aimed at helping employees who have lost their job, and it is managed by SOCSO. This scheme is meant to enable retrenched workers to gain monetary funds that would help them get back on their feet for up to six months.
Who is subject to EIS (Employment Insurance System)?
- All employers in the private sector are required to pay monthly contributions for each of their employees. (Government employees, domestic workers and the self-employed are exempted).
- An employee is defined as a person who is employed for wages under a contract of service or apprenticeship with an employer. The contract of service or apprenticeship may be expressed or implied and may be oral or in writing.
- All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempted.
- All employees aged 18 to 60 are required to contribute. However, employees aged 57 and above who have no prior contributions before the age of 57 are exempted.
EIS Common FAQ
Employers and employees will contribute 0.2% each of an employee’s salary, this means that the total contribution would be 0.4% of an employee’s monthly salary, the maximum monthly salary capped at RM 4000.00. No Worries, SQL Payroll will automatic calculate the EIS compliant to rules and regulation.
If an employee is 60-year-old above, EIS contribution is not required. SQL Payroll will detect the age of employee and automatic set to NO contribution to EIS.
All EIS applications must meet the following requirements:
i. To apply within 60 days from the date of loss of employment
ii. To meet the Contributions Qualifying Conditions, namely the EIS contributions that have been paid based on the EIS contribution schedule and having a minimum number of months within a specified period.
The EIS application can be made online via EIS Portal or go to the nearest SOCSO office throughout the country including Sabah and Sarawak.
What is PCB Malaysia?
PCB (Potangan Cukai Bulanan) or MTD (Monthly Tax Deduction) is an income tax deduction mechanism from an employee’s current monthly remuneration in accordance with the schedule of Monthly Tax Deductions (PCB) or other methods approved by the DG
What is subject to PCB?
| Type of Remuneration Subject to PCB | Type of Remuneration NOT Subject to PCB |
|---|---|
|
✅ Commission |
❌ Value of Living Accommodation (VOLA) |
|
✅ Salary / Wages |
❌ Deduction for Zakat |
|
✅ Overtime Payment |
❌ Benefits in Kind (BIK) |
|
✅ Allowance |
|
|
✅ Bonus / Incentive |
|
|
✅ Any other payment in addition to nomral remuneration for current month |
|
|
✅ Compensation for loss of employment |
|
|
✅ Director fees |
|
|
✅ Employee's share option scheme (ESOS) |
|
|
✅ Gratuity |
|
|
✅ Perquisite |
|
|
✅ Tax borne by the employer |
|
|
✅ Tips |
✳️ BIK and VOLA are part of
remuneration which is
not subject to MTD. However, employee may make an irrevocable election to include the BIK and VOLA as part of his remuneration to
be subject to MTD by completing a prescribed form and
submit to employer. If employer agrees, BIK and VOLA are
subjected to MTD. |
The above list is not exhaustive. Should you require further clarification, please contact IRB Malaysia Contact Management Centre at 1-300-88-5436, enquiry at any LHDN Office.
PCB Common FAQ
SQL Payroll has 100% accuracy for PCB calculation. SQL Payroll uses the latest formulas for the calculation. Hence, all PCB calculations are in line with LHDN’s own online pcb calculator.
Benefit-in-kind are benefits that employees receive from their employers. Examples of benefits are Motorcar, Value of Living Accommodation (VOLA) and etc. Employers can process benefit in kind prior to processing the routine payroll using SQL Payroll system.
You can also declare certain expenditures for optional tax relief. Expenditures that are valid for optional tax relief are medical expenses for parents, personal medical expenses, education, child education saving, and life insurance. You can insert all this record in SQL Payroll.
CP38 is an instruction for a monthly salary deduct issued by LHDN. Employers make additional deductions from employee’s salary towards the settlement of the employee’s income tax arrears. CP38 is useful in terms of easing the burden of taxpayers. Instead of paying a large sum or money in one go, CP38 is less drastic and less of a financial burden. In SQL Payroll, employers can set for an auto deduction on employee’s wages after receiving instructions from LHDN with simple finger clicks.