If your employee is planning to leave Malaysia for more than three (3) months, employers should be aware of their tax reporting obligations to the Inland Revenue Board of Malaysia (IRBM).
When is Form CP21 Required?
Employers must submit Form CP21 when an employee who is liable to Malaysian income tax is leaving Malaysia for a period exceeding three months.
The notification must be submitted at least 30 days before the employee’s expected departure date.
Online Submission is Mandatory
Since 1 January 2024, Form CP21 must be submitted online through the MyTax Portal using the e-SPC application.
Are There Any Exceptions?
Yes. Form CP21 is generally not required if the employee frequently travels in and out of Malaysia as part of their normal employment duties, provided the IRBM accepts that this is part of the employee’s work.
Employer’s Responsibility
If an employee is leaving Malaysia for more than three months without intending to return, the employer must withhold any outstanding payments, such as salary, bonuses, commissions, or gratuity.
These payments can only be released:
- With the approval of the IRBM; or
- After 90 days from the date the IRBM receives Form CP21.
What Happens If an Employer Does Not Comply?
Failure to comply with the CP21 requirements may result in:
- A fine of RM200 to RM20,000;
- Imprisonment of up to 6 months; or
- Both a fine and imprisonment.
In addition, the employer may become personally liable for any unpaid tax owed by the employee, and the Government may recover the amount through legal proceedings.
Key Takeaway
If your employee plans to leave Malaysia for more than three months, don’t overlook the CP21 notification requirement. Submitting the form on time helps ensure compliance with Malaysian tax regulations and avoids unnecessary penalties.
source :
https://www.hasil.gov.my/en/employers/notifications-of-termination-of-service/