Malaysia regulation update on tax reliefs for employees effective from 01 January 2024

Changes in tax reliefs

The applicable forms “TP1” & “TP3” has also been revised in this regard.

Changes for C-Suite employees

C-Suite employees are offered a flat tax rate of 15% on employment income for three consecutive years. Eligibility conditions for this incentive are:

• carry out employment with an approved company global service hub incentive.
• hold a C-Suite position or a key position in the company.
• receive a monthly salary of not less than RM 35,000 per month.

The amount of monthly tax deduction is determined in accordance with the following formula: “MTD for the month = [(PR) – (Z + X)] / (n + 1)”

Changes in childcare allowance exemption limit

Tax exemption limit on childcare allowance in respect of children up to 12 years of age, received by the employee or paid directly by the employer to the childcare centre is increased from RM 2,400 to RM 3,000 per year.

The above-mentioned changes are applicable from Jan 01, 2024.

Explanation on Voluntary EPF relief

More clarity has been provided on treatment of Voluntary EPF while calculating MTD.

There are two categories for Voluntary EPF relief:

• Voluntary EPF and Life insurance (TP1) (RM 3,000)
• Voluntary EPF including mandatory EPF (TP1) (RM 4,000)

K1 & LP1 amount calculation for MTD purpose:

Example: Mandatory EPF = RM 2,000, Voluntary EPF = RM 3,000, Life Insurance = RM 4,000

K1 = RM 2,000, LP1 = RM 5,000 (Vol. EPF (RM 4,000 category) = RM 2,000, Vol. EPF (RM 3,000 category) = RM 1,000, Life Insurance = RM 2,000)

Example: Mandatory EPF = RM 5,000, Voluntary EPF = RM 3,000, Life Insurance = RM 4,000

K1 = RM 4,000, LP1 = RM 3,000 (Vol. EPF (RM 3,000 category) = RM 3,000)

Please contact your Mercans’ services delivery team for any additional information regarding the implications of the above change

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Malaysia regulation update on tax reliefs for employees effective from 01 January 2024

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