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MTD (Monthly Tax Deduction)

What Is Monthly Tax Deductions (MTD)?

Monthly Tax Deductions (MTD), also known as Potongan Cukai Bulanan (PCB) in Malay, is a mechanism in which employers deduct monthly tax payments from the employment income of their employees. This mechanism is designed to avoid the issues that come with requiring payment of a large sum of income tax when the actual tax amount has been determined.
 
Employee shall provide their personal data to employers by Form TP1 (Individual Deduction And Rebate Claim Form). Therefore, these monthly deductions are net of all possible tax relief, tax rebate and zakat payments.
 
Started from Malaysia income tax year of assessment 2014 (tax filed in year 2015), employees are not required to file their income tax return if such Monthly Tax Deductions (MTD) constitute their final tax. However, there are some criteria must be met:
  • Your only source of income is your employment income;
  • Your employer has been deducting Monthly Tax Deductions (MTD) from your salary, correctly;
  • You have been working for 12 months in the calendar year with the same employer;
  • Your employer is not paying any of your taxes for you; and
  • You have not opted for a joint assessment with your spouse.
 
If you meet the above conditions and have not submitted a tax return by the deadline for submission (April 30th) you will be deemed to have made an election not to submit a return.
 
 
 
 

Employer's Responsibilities

Employer's responsibilities under the Monthly Tax Deductions (MTD) Rules are as follows:
  1. Deduct the Monthly Tax Deductions (MTD) from the remuneration of employee in each month or the relevant month in accordance with the Schedule of Monthly Tax Deductions or Computerised Calculation Method and pay to the Director General.
  2. Make additional deductions from employee's remuneration in accordance with the direction given by the Director General under Rule 4 of Monthly Tax Deductions (MTD) Rules.
  3. Employer shall pay to the Director General, not later than the fifteen day of every calendar month, the total amount of tax deducted or should have been deducted by him from the remuneration of employees during the preceding calendar month.
  4. Furnish a complete and accurate employee’s information of the following in a return when submitting Monthly Tax Deductions (MTD) payments/additional deductions: 
 
  1. income tax number (if any);
  2. name as stated on identity card or passport;
  3. new and old identity card number/police number/army number or passport number (for foreign employee); and
  4. Monthly Tax Deduction (MTD)/additional deductions amount.
 
 
 
 

How to Pay Monthly Tax Deductions (MTD)?

There are several options to pay Monthly Tax Deductions (MTD) to the Inland Revenue Board of Malaysia.
 
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.
 
Employers also can post Forms CP39 or CP39A with cheque to Inland Revenue Board of Malaysia. Postdated cheques and cheques issued by banks outside Malaysia will not be accepted. Please do not send cash through the post. Cheque/bank draft has to be submitted to Kuala Lumpur Payment Centre, Jalan Tunku Abdul Halim or collection unit in Kuching or Kota Kinabalu.
 
Payments Using Diskette
Monthly Tax Deductions (MTD) payments can also be made at all branches of CIMB Bank and Public Bank Berhad in Malaysia. The Monthly Tax Deductions (MTD) information must be saved in a diskette with format outlined by the Inland Revenue Board of Malaysia.
 
Payments Online
Monthly Tax Deductions (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 Monthly Tax Deductions (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.
 
 
 
 

Monthly Tax Deduction (MTD) Online Videos

E-PCB Tutorial
 
 
 
 

What We Can Help You?

We are licensed Tax Agent registered with Inland Revenue Board (IRB) under Section 153(3) of Income Tax Act 1967. As a professional tax consultant, we can advise and assist you in your company or individual income tax compliance and submission according to Income Tax Act 1967, IRB's public ruling, Tax audit & investigation frameworks, Tax technical guideline and etc. We can also advice you on income tax incentives which are available and best suited for you.
 
We are also GST agent registered with Royal Malaysian Customs Department. We can help you comply with and conform to the GST standards and requirements. Start from registration to preparation and submission of GST return, we can solve all GST technical issues faced by you. We will also advice you on rules and regulation related to your business or company GST affairs.
 
Our professional staff will assist our clients with:
  • the preparation and submission of all forms and returns on a timely basis;
  • the computations of tax payable whilst ensuring all possible deductions have been utilized;
  • correspondence with IRB in the event of tax appeals, disputes and reassessments;
  • advise on the best and latest possible incentive/tax deduction available for the tax payer.
 
 

L & Co Plt.

18A & 20, Jalan Sasa 2, Taman Gaya,
81800 Ulu Tiram, Johor, Malaysia.
Tel +607-859 0410
Fax +607-863 1003
Email liew@liew.my
 
     

What Our Client Say

     
L & Co always carry their services in professional way – well planning, in time, precise, friendly and professional. While we are stuck with problems, they can always advice us with industrial best practices and their views.
 
YM Tan
ICT Automation (M) Sdn Bhd
www.ict.com.my
 
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