As the year of 2022 has just ended, employers and HR managers in Malaysia need to gear up for the tax season. One of the essential tasks is to prepare and submit Form E to Lembaga Hasil Dalam Negeri Malaysia ("LHDN") or Inland Revenue Board of Malaysia ("IRBM") electronically by 31 March 2023.
Form E plays a critical role in reporting each employee's income, making it crucial for every employer to ensure accurate and timely submission.
In this blog post, we will guide you through the process of preparing Form E for Year 2022 and how to submit them through e-Filing on IRBM's MyTax platform.
Understanding Form E
What is Form E?
Form E is a declaration report submitted by employers to the IRBM every year, providing a list of each employee's income and deductions.
This form requires information on employees’ income, benefits and allowances received throughout 2022, and deductions such as the employee's EPF contributions. The submission deadline for Form E for the year 2022 is 31 March 2023.
What is the purpose of Form E?
The purpose of Form E is to ensure transparency in employee income details and provide reliable data for tax purposes. This process enables IRBM to determine the appropriate tax liability for each employee as part of their Yearly Assessment Return (Form BE or Form B in some cases). By submitting timely and accurate Form E reports each year, you can avoid penalties while ensuring compliance with Malaysian tax laws.
Who needs to submit Form E?
Every employer is required to submit Form E regardless of whether they have employees or not. It includes any dormant or non-performing company, all partnerships, and sole proprietorships.
Here are few of the key points to note when preparing and submitting Form E:
- e-Filing via MyTax: Companies must submit their Form E and CP8D via e-Filing through the MyTax platform. Although non-company entities can still opt to submit the Form E and CP8D manually, IRBM strongly encourages all parties to utilise the MyTax platform.
- Business Entities without Employees: Partnerships and Sole Proprietorships that do not have employees do not need to submit CP8D. However, Form E still needs to be submitted.
- Companies (Sdn. Bhd./Berhad): The particulars of director(s) who are involved in managing the company must be included in CP8D.
The table below summarises the requirements for the submission of Form E and CP8D:
Difference Between Form E And Form EA
Form E and Form EA are two annual tax forms that employers in Malaysia have to prepare.
Form EA provides details of employee earnings, contributions, deductions, tax exemptions, and taxes paid to IRBM via monthly deductions from the employees' salaries. Form EA must be given to each employee for their personal records.
To find out more about Form EA in detail, check out this article instead: The Employers & HR Managers' Guide to Preparing Form EA for the Year 2022
Form E on the other hand is a declaration report submitted by every employer to inform IRBM on the number of employees and their income details.
Steps-by-step Guide In Preparing And Submitting Form E For Year 2022
1. Preparing employer and employees information
Before submission of Form E, employers need to get the following information ready to ensure a smooth submission process, such as:
- Employer' information, such as:
- Employer's tax identification number (E Number)
- Employer's particulars, such as entity type, income tax identification number (C Number), business registration number (with SSM or professional bodies), business address, and contact details
- Employees' information. All the required information should already be available when Form EA was being prepared, such as:
- Full legal name of employee
- Personal identification number, i.e. NRIC number (for Malaysian employees) or passport number (for non-Malaysian employees)
- Personal income tax identification number (TIN)
- Category of employee (based on marital and child status)
- Monthly gross remuneration, allowances, benefits-in-kind, value of living accommodation, deductions, etc
2. Log in to MyTax Portal
3. Under the 'Role Selection' drop down, click on 'Employer' > select the company name that you are submitting the Form E for
4. Go to 'ezHasil Services' > e-Filing
5. Click on e-Form
6. Click on 'Tahun Taksiran' to select the Year of Assessment that we are working on - '2022'
7. Ensure that the company's E Number is displayed correctly > Click on 'Proceed'
8. Fill in the company's particulars
9. Key in the information relating to number of employees and its changes throughout 2022
10. Key in information of each directors and employee
11. Once all information is filled in correctly, sign off the declaration by clicking 'Sign & Send'
Best Practices For Accurate And Timely Form E Filing
Here are a few tips that can help employers and HR Managers to ensure accurate information provision, timely filing for Form E, and avoid unnecessary penalties due to erroneous or late filing:
- Keep accurate employee records
- Stay up-to-date with relevant tax laws and regulations
- Seek professional guidance if needed
- Utilise professional payroll systems that can help to keep track of employee records and generate the relevant documents easily.
Compliance Reminders And Consequences
Employers are reminded to file for Form E by the deadline of 31 March 2023, as failure to do so may result in penalties and fines imposed by LHDN.
Deadline For Form E Submission
As an employer in Malaysia, it is important to take note of the deadline to file for Form E for the year 2022.
Companies are required to submit their Form E's via e-Filing as described in the steps above. While it is optional for non-company entities to hand in Form E via e-Filing, it is strongly encouraged for you to still do so for ease of submission and to save time!
Penalties For Late Or Inaccurate Filing
Late or inaccurate filing of Form E can result in a penalty for employers.
According to Section 120(1)(b) of the Income Tax Act , employers who fail to submit Form E are liable to a fine of not less than RM200 and not more than RM20,000 or to imprisonment for a term not exceeding 6 months or both.
Conclusion: Why Accurate And Timely Form E Filing Is Critical For Employers
In conclusion, accurate and timely filing of Form E is crucial for employers in Malaysia. Failure to submit the form electronically by 31st March 2023 can result in penalties and legal consequences under the Income Tax Act.
It is essential for every employer to stay up-to-date with relevant tax laws and regulations, maintain accurate employee records, seek professional guidance if needed, and avoid common filing mistakes. By following best practices and complying with all requirements, employers can successfully prepare and submit their Form E for Year of Assessment 2022 (YA 2022) and ensure the smooth functioning of their business operations.
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