Malaysia Bookkeeping & Payroll Services

Monthly bookkeeping, payroll processing, statutory contributions, and HR compliance — for foreign-owned Sdn Bhd, foreign branches, and Labuan companies. Q4 2026 brings mandatory EPF for foreign workers, the biggest payroll change in years. We coordinate every monthly cycle with licensed accountants and approved auditors.

What We Do

Bookkeeping and payroll are where Malaysian compliance meets day-to-day operations. Every month, foreign-owned Sdn Bhds need to:

• Record transactions to MFRS or MPERS standards
• Process payroll for Malaysian and expatriate employees
• Calculate and remit EPF, SOCSO, EIS, PCB, and HRDF by the 15th of the following month
• Generate compliant payslips
• Maintain audit-ready records for the annual audited financial statements
• Reconcile MyInvois e-invoices to the books (where in scope)

A single missed deadline triggers automatic penalties — and stacked across multiple months, those penalties add up fast.

Horizon Hub Consulting is not an audit firm. Statutory audit requires registration as an Approved Auditor under the Companies Act 2016. Our role is to coordinate licensed accountants, payroll specialists, and approved auditors — running the project, integrating monthly bookkeeping with the annual audit cycle, and translating cross-border issues into Malaysian compliance.

We work with foreign-owned companies across North America, Europe, the Middle East, East Asia, Southeast Asia, and the CIS region — across manufacturing, technology, professional services, F&B, and trading sectors.

Who It’s For

• Foreign founders running a Malaysian Sdn Bhd who need monthly compliance handled
• First-year companies preparing for their first audit and Form C filing
• Multinational subsidiaries integrating Malaysian payroll with global HR systems
• Foreign branches processing local payroll while filing parent-company audited accounts with SSM
• Labuan companies managing Labuan-specific accounting and economic substance OPEX
• Companies hiring their first Malaysian employee and unsure of EPF/SOCSO/EIS/HRDF setup
• Companies with foreign expatriate employees facing the new Q4 2026 mandatory EPF rule

Bookkeeping

Accounting standards

Malaysian companies report under one of two frameworks issued by the Malaysian Accounting Standards Board (MASB):

• MFRS (Malaysian Financial Reporting Standards) — applies to entities with public accountability (listed companies, financial institutions). MFRS is fully aligned with IFRS.
• MPERS (Malaysian Private Entities Reporting Standard) — applies to private entities. Simpler than MFRS, but still rigorous.

Labuan companies report under accounting standards issued by Labuan FSA, separate from MASB frameworks.

We confirm the right framework during the consultation and align your chart of accounts accordingly.

Monthly bookkeeping cycle

• Sales and AR — invoicing aligned with MyInvois e-invoicing where in scope
• Purchases and AP — supplier invoices, payments, accruals
• Bank reconciliations — multi-currency where applicable
• Cash and petty cash management
• Fixed asset register with depreciation schedules
• General ledger posting and trial balance
• Monthly management accounts — P&L, balance sheet, cash flow

Annual cycle

• Year-end closing — accruals, prepayments, provisions
• Audit preparation — schedules, supporting documentation, management representations
• Coordination with approved auditor for the statutory audit
• Audited financial statements filed with SSM as part of the annual return

Audit threshold

Most Malaysian companies require statutory audit. The exemption applies only to very small private companies meeting all three criteria (no revenue, no employees, total assets ≤ RM300,000). Foreign-owned Sdn Bhds with active operations almost always require audit.

MyInvois integration

Where your company is in scope for MyInvois (Phase 4 from 1 January 2026 for RM1m–RM5m revenue), bookkeeping must reconcile to the validated e-invoice records. Non-compliant invoices may be disallowed during tax audit — affecting deductibility. We integrate MyInvois operations with the bookkeeping cycle.

Payroll

Malaysian payroll involves four main monthly contributions plus an annual cycle. Every contribution has its own rate, threshold, and submission deadline — and the rules differ for Malaysians, foreign workers, and senior employees.

EPF (Employees Provident Fund / KWSP)

• No wage cap — EPF applies to total monthly wages
• Mandatory for Malaysian citizens and permanent residents
• Mandatory for foreign workers from Q4 2026 — the biggest payroll change in 2026 (previously voluntary)
• Submission: by 15th of the following month
• Late payment: dividend rate + 1% per annum, minimum RM10; criminal penalties up to RM10,000 fine or 3 years’ imprisonment

SOCSO (Social Security Organisation / PERKESO)

• Wage ceiling: RM6,000 per month — contributions capped at this level
• Tiered contribution table rather than flat percentage
• Submission: by 15th of the following month
• Late payment: 6% per annum interest

EIS (Employment Insurance System / SIP)

• Coverage: Financial assistance and reskilling for employees who lose their jobs
• Rates: 0.2% employee + 0.2% employer (Malaysian / PR, under 60)
• Wage ceiling: RM6,000 per month — same as SOCSO
• Foreign workers: NOT covered — EIS is for Malaysian and PR employees only
• Submitted with SOCSO, by 15th of the following month

PCB (Monthly Tax Deduction / MTD / Potongan Cukai Bulanan)

• Resident employees (≥ 182 days in Malaysia per basis year): progressive rates 0% to 30% after personal reliefs
• Non-resident employees: flat 30% on Malaysian-source employment income, no personal reliefs
• Calculated by the employer using LHDN’s MTD schedule or Computerised Calculation method
• Submission: Form CP39, by 15th of the following month
• Late payment: 10% PCB late penalty

Personal reliefs (resident employees only)

Some of the most common reliefs that reduce PCB:

• Individual relief: RM9,000
• Spouse relief: RM4,000
• Child relief: RM2,000 to RM8,000 per child (depending on age and education)
• EPF contributions: up to RM4,000
• Medical insurance / takaful: up to RM3,000
• National Education Savings Scheme (SSPN): up to RM8,000

Reliefs are claimed via Form TP1 (employee declaration). Without TP1, PCB is calculated assuming no reliefs.

HRDF / HRD Corp Levy

• Mandatory for employers with 10 or more Malaysian employees in covered sectors (manufacturing, services, mining, construction, hotels, others)
• Rate: 1% of monthly payroll
• 5–9 employees can register voluntarily at 0.5%
• Foreign workers do not count toward the headcount threshold
• Foreign worker wages are NOT subject to HRDF
• Submission: monthly to HRD Corp
• Late payment: 10% penalty plus interest

Foreign Employee Payroll — 2026 Specifics

Foreign employees on Employment Pass, PVP, or other passes have distinct payroll treatment from Malaysian employees. The picture changed substantially in 2026.

Tax residency

• Resident (≥ 182 days in Malaysia per basis year): same progressive PCB rates as Malaysians, including personal reliefs
• Non-resident (< 182 days): flat 30% on Malaysian-source employment income — no reliefs

A foreign employee arriving mid-year is typically non-resident in the first year and may become resident in year two. We model the resident/non-resident transition carefully.

EPF — the 2026 change

Until Q3 2026: EPF was voluntary for foreign workers. If the employer elected to contribute, the minimum employer contribution was RM5/month (not the standard 12–13%).

From Q4 2026: EPF is mandatory for foreign workers at 2% employee + 2% employer of monthly wages. This represents one of the biggest payroll changes in years and affects every Malaysian employer with foreign staff. We update your payroll setup well in advance of the deadline.

SOCSO

Foreign workers have been mandatorily covered under the Employment Injury Scheme since 1 January 2019:

• Employer contribution: 1.25% of insured wages (Employment Injury Scheme only — no Invalidity Scheme)
• Wage ceiling RM6,000/month applies

EIS

Not applicable to foreign workers. EIS is restricted to Malaysian citizens and PRs.

Pass cancellation and exit

When a foreign employee leaves Malaysia or terminates employment:

• Form CP21 — notification to LHDN of cessation of employment
• Form CP22A — notification of departure from Malaysia (foreign employees)
• Tax clearance letter (Sijil Penyelesaian Cukai) — required before departure
• EPF withdrawal — voluntary EPF contributions can be withdrawn by foreign workers leaving Malaysia permanently
• Pass cancellation with Immigration Department

We coordinate every step alongside HR and the licensed tax agent.

Annual Cycle

Beyond monthly processing, the year-end closing involves:

• EA Form — annual statement of remuneration for each employee, due to the employee by last day of February
• Form E — annual return by employer to LHDN, due 31 March
• CP159 — statement of tax deduction summary
• Audited financial statements — coordinated with the approved auditor
• Annual return to SSM — within 30 days of the company’s anniversary
• Form C — corporate tax return, 7 months after FY-end
• Beneficial Ownership register update — under Companies (Amendment) Act 2024

We run the year-end as a structured project, not a scramble.

Our Process

We work in five phases:

1. Phase 1 — Free Consultation & Setup Audit (Day 0). We review your existing entity, employee count, foreign worker mix, current payroll setup, and compliance gaps. Written setup plan within 48 hours.
2. Phase 2 — Statutory Registration (Weeks 1–2). Where you don’t already have them in place, we coordinate registration for EPF (within 7 days of first hire), SOCSO/EIS (within 30 days), HRDF (where mandatory), and LHDN PCB account. Approved accountants and auditors engaged from our trusted panel.
3. Phase 3 — Payroll & Bookkeeping Onboarding (Weeks 2–4). Chart of accounts setup aligned to MFRS or MPERS, payroll calendar configuration, employee data migration, integration with MyInvois where in scope.
4. Phase 4 — Monthly Cycle. Bookkeeping, payroll processing, EPF/SOCSO/EIS/PCB/HRDF remittance, payslip generation, monthly management accounts, MyInvois operations — all on a fixed calendar with named owners.
5. Phase 5 — Annual Cycle. Year-end closing, audit coordination with approved auditor, EA forms, Form E, Form C tax filing, BO register update, planning the next year’s calendar.

You receive a project tracker covering every employee, every contribution, and every deadline.

Why Horizon Hub

• Coordinator, not licensed firm. Statutory audit requires Approved Auditor licensing under the Companies Act 2016. We work with a curated panel of licensed accountants and approved auditors — running the project around them.
• Foreign-employee-current. The Q4 2026 mandatory EPF for foreign workers is already in our payroll calendars. We handle the resident/non-resident PCB transition. We manage CP21, CP22A, and tax clearance for departing expatriates.
• MyInvois integration. Bookkeeping reconciled to MyInvois daily — non-compliant invoices identified and remediated before they affect deductibility.
• One project manager, parallel workstreams. Bookkeeping, payroll, statutory contributions, audit prep, year-end — coordinated under one accountable contact.
• Multilingual. English, Russian, Chinese, Arabic, and other major business languages.
• Cross-border depth. Multi-currency books, transfer pricing-aware journal entries, Labuan-mainland reconciliation, expatriate tax. Handled regularly, not as exceptions.

Frequently Asked Questions

What are the main statutory contributions in Malaysia?

EPF, SOCSO, EIS, and PCB — plus HRDF (HRD Corp Levy) for employers with 10+ Malaysian employees in covered sectors. All four core contributions are due by the 15th of the following month.

What changes for foreign worker payroll in 2026?

The biggest change is mandatory EPF for foreign workers from Q4 2026 — at 2% employee + 2% employer. Previously, EPF was voluntary for foreign workers. SOCSO has been mandatory for foreign workers since January 2019 (1.25% employer, Employment Injury Scheme only). EIS does not apply to foreign workers.

What is the EPF rate for Malaysian employees?

Employee 11%, Employer 12% for salaries above RM5,000. Employer 13% for salaries at or below RM5,000. There is no wage cap on EPF. Both contributions are based on total monthly wages.

What is the SOCSO wage ceiling?

RM6,000 per month. Employees earning above this still contribute, but the contribution amount is capped at the RM6,000 bracket. The same ceiling applies to EIS.

Do I need to register for HRDF / HRD Corp?

Mandatory if you have 10 or more Malaysian employees in a covered sector (manufacturing, services, mining, construction, hotels). The levy is 1% of monthly payroll for Malaysian employees only — foreign workers do not count toward the headcount threshold and their wages are not subject to HRDF. Employers with 5–9 employees can register voluntarily at 0.5%.

How is PCB calculated?

PCB (Monthly Tax Deduction) is Malaysia’s PAYE system. Resident employees are taxed at progressive rates from 0% to 30% after personal reliefs (RM9,000 individual, RM4,000 spouse, RM2,000–8,000 child, EPF up to RM4,000). Non-resident employees are taxed at a flat 30% on Malaysian-source employment income with no reliefs. PCB is submitted via Form CP39 by the 15th of the following month.

When is an employee resident vs non-resident for tax?

Resident: physically present in Malaysia for 182 days or more in a basis year. Non-resident: less than 182 days. A foreign employee arriving mid-year is typically non-resident in year one and may become resident in year two. The transition affects PCB calculation significantly.

Do I need a statutory audit?

Most active foreign-owned Sdn Bhds require statutory audit. The audit exemption applies only to very small private companies meeting strict criteria. Foreign branches must file the parent company’s audited financial statements with SSM annually. We coordinate with approved auditors for both.

What is the difference between MFRS and MPERS?

MFRS (Malaysian Financial Reporting Standards) is fully aligned with IFRS and applies to entities with public accountability. MPERS (Malaysian Private Entities Reporting Standard) is the simpler framework for private entities — most foreign-owned Sdn Bhds without public listing apply MPERS. The framework is selected at incorporation and changing later requires careful planning.

What happens if my expatriate leaves Malaysia?

Three steps run in parallel: (1) Form CP21 notifying LHDN of cessation of employment, (2) Form CP22A notifying departure of a foreign employee, and (3) obtaining the Tax Clearance Letter before they leave. The expatriate’s pass is then cancelled with Immigration. EPF voluntary contributions (and the upcoming mandatory contributions from Q4 2026) can be withdrawn upon permanent departure.

Can I run payroll from outside Malaysia?

Technically yes — but the employer of record must be the Malaysian entity. The Malaysian entity submits all statutory contributions in Malaysia. Cross-border payroll software can be used, but the local statutory framework cannot be bypassed. We typically run payroll on Malaysian payroll software with cross-border data integration where required.

What records do I need to keep?

Under the Income Tax Act 1967 and Companies Act 2016, businesses must keep accounting records for at least 7 years. This includes general ledgers, supporting invoices, payroll records, EA forms, contribution receipts, and audited financial statements. Records can be kept electronically as long as they are retrievable and complete.

Get Your Monthly Cycle Mapped

Free 30-minute consultation. Setup plan within 48 hours covering EPF/SOCSO/EIS/PCB/HRDF registrations, foreign worker EPF transition, payroll calendar, and audit-ready bookkeeping. We engage licensed accountants and approved auditors on your behalf. No obligation.

info@horizonhubconsulting.com

• ↑ Back to Finance & Compliance (parent)
• → Tax & Accounting Advisory (corporate tax, SST, MyInvois, withholding tax, transfer pricing)
• ↗ SDN.Bhd Registration (the entity that triggers payroll obligations)
• ↗ Foreign Branch & Representative Office (parent-company audited accounts framework)
• ↗ Malaysia Employment Pass (the visa most foreign payroll situations originate from)
• ↗ Dependent Pass & Family Visas (family relocations — compliance touchpoints)