Setting up and maintaining payroll in Malaysia
Malaysia is a dynamic, exciting country with a growing economy and a bright future. With economic powerhouses like Kuala Lumpur and its proximity to many other important areas of Asia, Malaysia attracts many foreign companies aiming to expand into the region.
If you’re interested in expanding your business into Malaysia, a key step is hiring locally. Part of this involves setting up a Malaysia payroll system, which can be a bewildering process for many. This is exactly why many companies choose to outsource their payroll setup and management.
At Horizons, we offer tailored Malaysia payroll outsourcing services, helping you build your presence in Malaysia more efficiently, whether you already have a registered entity in the country or not.
Why choose the Horizons payroll solution?
If you have an entity
Do you have a registered entity in Malaysia? We offer comprehensive payroll outsourcing services to help you set up and run your payroll via our Malaysia payroll outsourcing platform.
Your entity will be the employer of record, but we are here to handle all the HR, administration, tax compliance, and more, using our expertise in Malaysian employment regulations to make life easier for you.
If you don’t have an entity
If you don’t have a registered entity in Malaysia, you can use our Malaysia PEO. Our Malaysian subsidiary will act as employer of record for your employees, and our team will handle the HR, administration, and complex legal compliance work.
Choose this service for a low-risk, flexible solution for your Malaysia payroll setup and management, with all the benefits of hiring locally and none of the hassle.
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Malaysia payroll tax rates & laws
What are the withholdings and tax rules in Malaysia?
As with most countries, Malaysia uses a progressive tax system with higher earner contributing more as a percentage of income. The income tax rate varies between 0% and 28%. There is also a fund called the Employment Provident Fund (EPF), which covers pensions and savings for workers. Employees pay 11% into this fund, and employers pay either 12% or 13% (for employees earning under 5,000 MYR/month.
Additionally, both employees and their employers are required to pay into a social security system to cover benefits in cases of injury, illness, and death. The amount paid by employees varies depending on income, and employers pay 1,75% of payroll every month.
Corporate taxes are set at 24% for the majority of businesses.
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Provident Fund (employees under the age of 60)
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12.00% – 13.00%
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Provident Fund (employees over the age of 60)
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4.0%-6.5%
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Social Security (SOCSO)
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1.75%
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Employment Insurance (EIS)
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0.2%
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Human Resource Development Fund (over 10 employees)
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1.0%
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Total Employment Cost
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Up to 15.95% |
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Provident Fund (employees under the age of 60)
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11.0%
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Provident Fund (employees over the age of 60)
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0.0%-5.5%
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Social Security (SOCSO)
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0.50%
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Employment Insurance (EIS)
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0.2% |
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Total Employee Cost
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Up to 11.70%
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Up to 5,000
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0.00%
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5,000 – 20,0000
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1.00%
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20,000 – 35,000
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3.00%
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35,000 – 50,000
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8.00%
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50,000 – 70,000
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14.00%
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70,000 – 100,000
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21.00%
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100,000 – 250,000
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24.00%
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250,000 – 400,000
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24.50%
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400,000 – 600,000
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25.00%
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600,000 – 1,000,000
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26.00%
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1,000,000 – 2,000,000
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28.00%
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2,000,000 and over
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30.00%
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Employee entitlements and terminations
How to establish Malaysia payroll outsourcing
You may choose to establish an internal payroll in Malaysia, but this is a time-intensive option that can be very difficult to execute in practice, with language barriers, cultural differences, and frequently changing regulations getting in the way. The simplest option is to outsource your Malaysia payroll setup and management.
Horizons offers comprehensive payroll setup and management services, helping you get up and running in the country as quickly as possible. We can also offer our Malaysia subsidiary to act as employer of record, so you can benefit from our services even if you don’t have an entity in the country.
Manage payroll in Malaysia
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
