In Malaysia, employers bear significant responsibilities in salary reporting and tax management, and the Form E and Form EA are crucial documents during the annual Malaysia tax filing process. However, many businesses and employees are unsure about the purposes, Form E and Form EA submission requirements, and tax implications of these two forms. Therefore, understanding the role of the Form E and Form EA is essential not only to help employees complete their personal tax filings accurately but also to ensure that employers comply with Malaysia tax regulations, avoiding potential fines and legal liabilities.
2025 Form EA Malaysia: Employee’s Annual Income Declaration
The Form EA is a document provided by the employer to the employee, detailing all of the employee’s earnings, allowances, benefits, and the Monthly Tax Deductions (PCB) that have been deducted for the year. The primary purpose of the Form EA is to allow the employee to accurately report their income when filing their personal income tax return (Form BE). Employers must provide the Form EA to all employees by the last day of February of the following year to ensure employees can complete their Malaysia tax filings on time.
The Form EA covers various types of income the employee has earned throughout the year, including basic salary, bonuses, commissions, and both tax-exempt and taxable allowances, such as transportation allowances and housing allowances. Additionally, the form will list the employee’s contributions to the Employees Provident Fund (EPF), Social Security Organization (SOCSO) and Employment Insurance System (EIS), along with the amount of PCB withheld from the employee’s salary during the year. For employees, the Form EA is not only crucial for filing personal income taxes but also serves as an important document to review their annual income and tax deductions. If an employee does not receive the Form EA by the stipulated deadline, they should immediately request it from their employer, as failure to do so could delay their tax filing and even result in fines.
Common Mistakes in Filling Out the Form EA
Although the Form EA is critical for employees’ tax filings with the LHDN, many employers make common mistakes when filling it out, leading to Malaysia tax issues. Below are two common mistakes:
- Reporting Only Salary Income and Ignoring Hidden Benefits Many employers only report the income shown on the payslip and overlook other taxable items such as benefits-in-kind, taxes borne by the employer, employee share options, gratuity payments or compensations. These “hidden benefits” are also considered taxable income and must be reported on the Form EA.
- Failing to Report Tax-Exempt Allowances Even though some allowances may be tax-exempt, employers are still required to include them in the Form EA. For example, travelling allowances, phone allowances, or meal allowances are tax-exempt but must still be listed on the form. Failing to report these allowances could create compliance issues with Malaysian tax authorities.
2025 Form E: Employer’s Annual Tax Declaration and Tax Reporting Obligation
Form E is an annual declaration that employers submit to the Inland Revenue Board of Malaysia (LHDN), reporting the total salary paid to employees during the previous year and the PCB tax deductions made. In other words, Form E is an important document for reporting the company’s salary payout and Malaysia tax compliance, not an individual tax document for each employee. Therefore, all employers, whether or not they have employees, are required to submit Form E by March 31 each year to ensure compliance with Malaysia tax reporting requirements.
Consequences of Failing to Submit the Form EA or Form E Submission on Time
If an employer fails to provide the Form EA to employees on time, employees will be unable to file their personal Malaysia taxes correctly and may face fines for late Form EA and Form E submission. Additionally, the Inland Revenue Board may conduct an investigation into the employer to determine if there has been any misreporting of salaries or failure to deduct PCB properly. Employers who fail to provide the Form EA or submit Form E on time may face fines ranging from RM200 to RM20,000 or even imprisonment for up to six months, or both. These legal consequences clearly demonstrate the importance of employers taking their obligations regarding the Form EA and Form E seriously to ensure full compliance with Malaysian tax laws.
Conclusion: Importance of Form E and Form EA Submission for Accurate LHDN Tax Filing
The Form E and Form EA are essential tax documents that Malaysian employers and employees must pay close attention to every year. The Form EA is used for employees’ personal Malaysia income tax filings, while Form E is a report that employers submit to the Inland Revenue Board regarding salaries and PCB.
Employers and employees should be especially cautious of common mistakes when filling out the Form E and Form EA to ensure that no income or benefits are omitted during the reporting process, maintaining full compliance with Malaysian tax regulations.
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