PCB and MTD is the acronym of Monthly Tax Deduction in Malaysia. It is also popularly called PCB which means Potongan Cukai Bulanan in Malaysia. It is an income tax deduction process. Using this tax payer can deduce a certain amount from his/her earned capital. The aim of PCB is to reduce burden on an employee paying a big chunk when actual tax is calculated and issued from the main income.
There are certain procedures that one has to follow for registering & submitting monthly tax deductions in Malaysia. Here in this piece of content, we will give emphasis on this particular aspect.
Before running into the main topic one thing must be noted that there are several misconceptions regarding PCB or MTD. Many employees working in Malaysia has a concept that this PCB or MTD is already deducted automatically from their monthly salary before the final payday.
As the MTD is already deducted from the income, no additional taxes need to be paid thereafter. The reality is that MTD is just a part of the tax, and a taxpayer is subjected to pay rest of the actual taxation implied based on the monthly salary.
PCB registration process
Registering for PCB or MTD, one has to be eligible and need to fulfill several criteria and requirements. In this part we will get to know all those pre requisitions, however, it is also important to know who are the taxpayers and on whom this PCB implies.
Following are the eligibility criteria which validate an individual to pay tax in Malaysia:
- Individual who earns a regular basis and eligible to pay tax
- One who have regular income from his/her own business
- Employee subject to monthly salary and PCB or MTD at regular intervals.
- Employer tax files for any owner whose company hired employees.
- Any company that has not been registered by IRBM yet
Timeline and registration procedure for PCB or MTD in Malaysia
Once you are an eligible taxpayer, and falls under the employee category where you are getting a monthly salary, you have to consider the PCB registration process here: Following are the timeline and signup process of PCB or MTD in Malaysia:
- From July 1st 2019, Manual Form CP39 has been abolished and it will no longer be accepted by the MIRB.
- Instead of that manual form the new e-CP39 will be in use. This is an online process of PCB registration which entirely works online.
- Through eCP39 an employee can submit his/her monthly PCB online with convenience.
- This therefore finally closes the manual MTD submission process using check or bank drafts in MIRB counters.
- This eCP-39 is also referred as the epcb data or online PCB as well.
- For being a part of this online facility one has to submit employees’ data online to the MIRB to accelerate MTB activities.
- An e-CP39 Data Verification Slip need to be ordered collected after submitting the e-CP39 online.
- Once this verification slip is in hand, payment has to be cleared out.
- This is done by the employers’ behalf of each employees working in their company. In order to facilitate their work, epcb or e-CP39 has MTD calculators, which saves time and efforts.
PCB is deducted from the employees’ monthly salary. Previously, there were some questions and confusions regarding transparency of employer’s proper submission of PCB and excess deduction rate from employees’ monthly salary. After the introduction of epcb or eCP-39, things are now more transparent.
The online process is much more reliable and time saving than the old manual paper form process. An employer or the company, when asked by the Inland Revenue Board, is required to show the monthly slips and reports of MTD or PCB returns of any employee. The report of remit amount deducted from the monthly salary of an employee must be submitted within the 10 days of the following month of enquiry.
PCB Payment Methods
Malaysian employers have multiple ways to pay the MTD or PCB in monthly intervals to the Inland Revenue Board or IRB of Malaysia. We will discuss the common submission methods here, however, it must be noted that the manual payment method, which is through Form CP39 or CP39A has been halted from July 1st 2019.
Instead, it has been replaced with eCP39 form. This is a new online format for registering & submitting monthly tax deductions in Malaysia. Employers however, can also make tax payments through pen drives, CDs, diskettes facilities as well if necessary. Following are the common method, for PCB or MTD payment process in Malaysia
Manual Payment (Obsolete)
Just like any other payment methods, manual payment was conducted by the employer on behalf of the employee of a company. The employer needs to collect the Form CP39 or CP39A and fill it for an individual employee accordingly. Employers then submit the drafted Forms CP39 or CP39A to the Inland Revenue Board (IRB) of Malaysia.
In particular, it has to be submitted to the office’s dedicated counter with recommended payable money. The counter also accepts hand drafted, computer printed or photocopied forms. Manual payments were accepted at counters located only in the Kuala Lumpur, Kota Kinabalu and Kuching IRB offices.
Payments via Diskette
PCB payments can also be submitted to the nearest IRB branches or any branches of Public Bank Berhad and CIMB Bank in Malaysia. However, in this case the format of CP39 must be in digital form. It must be in data information format according to the instruction of IRB Malaysia.
During payment procedures in the mentioned bank branches the data must be in text format and has to be saved on a disk. It is advised to send the data disk as a sample as well as a hardcopy of the list of MTD deductions for assurance and reduce any chance of error for first time submission through diskette.
If the payment is successful, an approval latter will be sent to the payer. However, if fail to be succeeded to pay in a recommended way, a rejection letter along with a report of reason will be issued to the payer.
This method is by far the most convenient way to pay the MTD or PCB payments. Through this online process both registering & submitting monthly tax deductions in Malaysia is convenient and time saving.
In this online method an employer need to directly log into their respective internet banking accounts. There is eCP39 form which allows employer to draft the PCB payment form, but absolutely online and more convenient manner.
After understanding the online instructions, form submission to IRB online, payment process has to be carried out immediately after online form submission. There are multiple online payment gateways, which make the whole process even easier for employers.
Penalties for ignoring PCB or MTD payments
If PCB OR MTD payment is ignored, an employer has to face penalties and fines in Malaysia. Employers who fail or ignore the payments before the mid of each month are subjected of being fined or even imprisonments.
The fine announced to be RM200 to a maximum of RM20000. The imprisonment can go up to 6 months. Both fine and imprisonment may occur in case of severe ignorance and fail to remit the payment to the IRB Malaysia.