Social security contributions
Employees’ Provident Fund (EPF)
The Malaysian EPF is a compulsory pension scheme for all Malaysians. The EPF provides for compulsory retirement savings and contributions for all Malaysian citizens and Malaysian permanent residents who are working in Malaysia. It is not compulsory for non-Malaysian citizens and non-Malaysian permanent residents to contribute to the EPF, but they may elect to do so.
|Contribution by||Malaysian citizens and permanent residents (mandatory)||Expatriates and foreign workers (voluntary)|
|% of contribution of employee’s wages (minimum)|
|Below age 60:|
|Income > MYR 5,000||12.0%||11.0%*||MYR 5 per person||11.0%*|
|Income ≤ MYR 5,000||13.0%|
|Age 60 and above:|
|Income > MYR 5,000||Malaysian: 4.0%;
Permanent resident: 6.0%
Permanent resident: 5.5%
|MYR 5 per person||5.5%|
|Income ≤ MYR 5,000||
Malaysian: 4.0%;Permanent resident: 6.5%
*Contribution rate is reduced to 9% for a period of 12 months from 1 January 2021.
Social Security Organisation
Malaysia also has a Social Security Organisation (SOCSO) who administers the Employment Injury Insurance Scheme (EIIS) and the Invalidity Pension Scheme (IPS). SOCSO coverage and protection is limited to Malaysian citizens and permanent residents. A monthly contribution must be made and may fall under one of two categories:
- Both the employer and employee make monthly contributions to EIIS and IPS. The sum is based on the employee’s monthly wages and is restricted to a maximum of MYR 69.05 for the employer and MYR 19.75 for the employee.
- The employer makes a contribution to EIIS only for employees who are not eligible to be covered under the IPS, with the amount restricted to a monthly maximum of MYR 49.40. Malaysian employers are required to contribute to SOCSO on a monthly basis for all their foreign employees (including expatriates). However, the employment or assignment arrangement could impact the applicability of the requirement onto the employee. As a result, each case needs to be examined individually to determine the applicability.
Employment Insurance System (EIS)
The EIS provides certain benefits and a re-employment placement programme for insured persons in the event of loss of employment to promote active labour market policies. The EIS covers only Malaysian citizens and permanent residents.
Both the employer and employee make monthly contributions of 0.2% of employee's wage but restricted to a maximum of MYR 7.90 for employer and employee, respectively.
Real property gains tax (RPGT)
RPGT is charged upon gains from disposals of real property. See the Other taxes section in the Corporate tax summary. RPGT is imposed on individuals as follows:
|Up to 3 years||30%||30%|
|In the 4th year||20%||30%|
|In the 5th year||15%||30%|
|Exceeding 5 years||5%||10%|
Sales tax and service tax
The rate of both sales tax and service tax is 6%.
Net wealth/worth taxes
There are no net wealth/worth taxes in Malaysia.
Inheritance, estate, and gift taxes
There are no inheritance, estate, or gift taxes in Malaysia.
Property tax is levied on the gross annual value of property as determined by the local state authorities.
Luxury and excise duties
Excise duties are imposed on a selected range of goods manufactured and imported into Malaysia. Goods that are subject to excise duty include beer/stout, cider and perry, rice wine, mead, un-denatured ethyl alcohol, brandy, whisky, rum and tafia, gin, cigarettes containing tobacco, motor vehicles, motorcycles, playing cards, and mahjong tiles. See the Other taxes section in the Corporate tax summary for rates and more information.
Malaysia imposes stamp duty, which is payable by the buyer/transferee, on chargeable instruments. See the Other taxes section in the Corporate tax summary for rates and more information.