In Malaysia, the terms Monthly Tax Deductions (MTD) and Potongan Cukai Bulanan (PCB) are commonly used acronyms that refer to the same concept. While one is in English and the other is in the local Malay dialect, they both pertain to the deduction of taxes from individuals’ monthly salaries. However, a misunderstanding often arises among working individuals who believe that their income tax obligations are settled through the PCB deductions from their salaries. This misconception stems from the fact that PCB deductions are typically insufficient to cover the actual amount of taxes owed by taxpayers.

The mechanism of PCB and MTD involves deducting a specific amount from employees’ current remuneration to alleviate the burden of paying a lump sum when the final tax amount is determined.

 

PCB is deducted from employees’ salaries, and employers are responsible for ensuring the accurate deduction of the required amount. Subsequently, employers are tasked with remitting the deducted amount to the Inland Revenue Board by the 15th day of the following month.

 

 

Methods of Payment Accepted by the Inland Revenue Board

Malaysian employers have various payment methods available to remit MTD payments to the Inland Revenue Board of Malaysia. These methods encompass pen drives, CDs, diskettes, e-payment facilities, and manual submissions using Forms CP39 or CP39A.

 

  • Manual Payment – Employers can manually submit payment through Forms CP39 or CP39A at the payment counter of the Inland Revenue Board of Malaysia. Both original and photocopied or computer-generated forms are acceptable. Manual payments must be made electronically alongside Form 39 or CP39A, specifically at counters located in Kuala Lumpur, Kota Kinabalu, and Kuching payment centers.

 

  • Payment Using Diskette – MTD payments can also be facilitated at branches of CIMB Bank and Public Bank Berhad in Malaysia. However, adherence to the CP39 format data outlined by the Inland Revenue Board is essential. The payment text file must be stored solely on a diskette. First-time users of the diskette method are advised to provide a sample of the data CP39 format along with a list of MTD deductions for testing. Successful applicants receive an approval letter, while unsuccessful ones receive a rejection letter accompanied by a report.

 

  • Online Payments – MTD payments can be made online using FPX for FPX members or by directly accessing respective internet banking accounts. It’s important to note that e-PCB and e-Data PCB payments can only be executed through the FPX medium via the corresponding websites.

 

Consequences of Payment Delays

Employers failing to remit payments before the 15th of the ensuing month face potential fines. Penalties start at a minimum of RM200 and can go up to RM20,000, coupled with a maximum of 6 months’ imprisonment, or a combination of both in certain cases. Neglecting to deduct MTD payments or deducting them but failing to remit to the Inland Revenue Board of Malaysia can lead to legal prosecution in a civil court.