Setting Up Taxation

This chapter provides an overview of Malaysian income tax and discusses how to:

Identify company tax details.
Derive employee tax scales.
Enter employee tax details.
Set up benefits in kind (BIKs).
Report tax data.

Note. The PeopleSoft system delivers a query that you can run to view the names of all delivered elements designed for Malaysia. Instructions for running the query are provided in the PeopleSoft Enterprise Global Payroll 8.9 PeopleBook.

See Also

Viewing the Delivered Elements

Understanding Income Tax

This section discusses:

Determination of the tax category.
Determination of the tax scale.
Determination of the taxable gross.
Calculation of the tax.

Determination of the Tax Category

The system uses the tax deduction table to determine which tax deductions apply to a payee. The table that is used depends on the payee's marital status, gender, and spouse's employment status. The system uses the formula TAX FM CATEGORY, data from Human Resources, and the Payee Details page to assign tax categories. This formula is referenced by the formula TAX FM INIT (INITIALIZATION TAXES), which is resolved first in the TAX SE CALC section.

Note. The system retrieves the tax category only when using the formula method of tax calculation.

Determination of the Tax Scale

The system determines the appropriate tax scale by assessing the payee's eligible children. Applicable criteria are the child's age, student status, the child's marital status, and disability. The system uses the formula TAX FM DERIVE SC and data from Human Resources (including the Full Time Student and Student in Malaysia fields on the Update Dependent/Beneficiary page) to determine the tax scale.

To calculate taxes, the system can use either the tax scale method or the formula method. You make this selection by setting the variable TAX VR METHOD to S (scales method) or F (formula method).

When using the tax scale method, you can override the tax scale at the payee level by using the Maintain Tax Details MYS - Payee Details page. When using the formula method, you can override the category and number of dependents at the payee level by using the Maintain Tax Details MYS - Payee Details page.

Note. The system is delivered with TAX VR METHOD set to F.

See Also

PeopleSoft Enterprise Human Resources 8.9 PeopleBook: Administer Workforce

Determination of the Taxable Gross

The taxable gross is the amount in each pay period that the system uses to calculate tax liabilities. The payroll system calculates the taxable gross amount by subtracting all of the nontaxable earnings and pretax deductions and benefits from the total gross income. To accomplish this, the system uses TAX FM BASE and TAX FM ANN BASE, which use the regular gross amount and annual gross amount, respectively.

Taxable gross consists of three tax classes: regular tax (TAX AC REG GROSS), annual tax (TAX AC ANN GROSS), or previous year tax (TAX AC BASE PY).

Calculation of the Tax

The system uses a scheduler tax-calculation process depending on the tax method that you select using the variable TAX VR OPTIONS. The possible processes are:

Calculate no tax for the period.
Calculate taxes as a flat percentage.
The month is divided into two pay periods.

For the first pay period, the system predicts the total monthly tax deduction (using formula TAX FM COMPTE OPT3) and applies this amount. In the last pay period, or for terminated employees, the system automatically calculates the reconciliation deduction using formula TAX FM COMPTE OPT4.
Calculate the monthly tax for the month to date (MTD) income and subtract the previously calculated taxes using formula TAX FM COMPTE OPT4.
Divide the month into two pay periods.

For the first pay period, the system predicts the total monthly tax deduction (using formula TAX FM COMPTE OPT3), compares it with the amount that is calculated through method 4, and applies the larger of the two. In the last pay period, or for terminated employees, the system automatically calculates the reconciliation deduction using formula TAX FM COMPTE OPT4.

Note. The variable TAX VR OPTIONS operates at a collective level. You can override it at the payee or organizational level.

The system calculates annual tax in this way:

Derives Tax A by adding the MTD scheduler tax income and the recurring monthly rate for the missing period of the month when the period end date is not equal to the month end date.
Derives Tax B by adding 1/12 of the MTD annual tax income to the income that is used to calculate MTD tax.
Determines the annual tax, where

(Annual Tax) = (Tax B – Tax A) x 12.

The previous year tax calculation process is similar to the annual tax process, using the schedule income and tax from the last month of the previous year as the base. Thus, the EPF pretax deduction ceiling (416 MYR) calculation is based on what was applied in the last month of the previous year.

Note. When a noncontractual bonus for the current year needs to be run before the regular payroll for a particular calendar, you must replace the value that is contained in formula CMN FM REMPER with a 1 at the calendar level override.

Identifying Company Tax Details

To set up identification of company tax details, use the Tax Number Table MYS (GPMY_TAX_TBL) and Statutory Region Table MYS (GPMY_STAT_REG) components.

This section discusses how to:

Set up the company reference number.
Enter reference number contact information.
Associate a reference number with an organizational link.

Pages Used to Identify Company Tax Details

Page Name	Object Name	Navigation	Usage
Default Settings	COMPANY_TABLE2	Set Up HRMS, Foundation Tables, Organization, Company, Default Settings	Set up default company information; for example, the Malaysian reference and registration numbers that are used by various statutory reports.
Statutory Region	GPMY_STAT_REG	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Framework, Organizational, Statutory Region Table MYS	Maintain Statutory regional information for EPF, SOCSO and taxation Reporting
Tax Number Table	GPMY_TAX_TBL	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Tax Number Table MYS	Maintain employer contact information for tax reporting.
Tax Data	GPMY_TAX_ORG_NBR	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Framework, Organizational, Organization Numbers MYS, Tax Data	Associate a tax reference number with an organizational unit, such as a company, pay group, location, establishment, or department.
Tax Reference Number Details	GPMY_TAX_ORG_SEC	Click the Details button on the Tax Data page.	View employer details that are associated with the tax reference number.

Setting Up the Company Reference Number

Access the Default Settings page.

Reference Number	Enter the company reference number, which is a number that the government of Malaysia assigns to an organization to uniquely identify it. This number is also the Company C File Number. This number is used in Annual Statement of Tax Deductions - Malaysian CP159 report (GPMYTX05).
Registration Number	Enter the Company Registration Number, which is a number that the government of Malaysia assigns to an organization to uniquely identify it. The Registration Number below is used in CP39 Monthly Statement of Tax Deductions - Electronic form (GPMYTX04).

See Also

PeopleSoft Enterprise HRMS 8.9 Application Fundamentals PeopleBook

Entering Statutory Region Information

Access the Statutory Region page

Statutory Region

Enter the statutory region. This region is reported on the following forms: EPF Form 6, SOCSO Form 8A, SOCSO Form 8B, CP39 Monthly Statement of Tax Deductions - Electronic form, Employee Tax Refund Form - Malaysian CP159A/PCB2(II).

Entering Reference Number Contact Information

Access the Tax Number Table page.

Registered Name

Enter the employer's official name.

Address

Enter the employer's address.

Responsible ID

Enter the employee ID of the organization's tax contact.

Name

Enter the name of the organization's contact person for taxation inquiries. This name appears as the company contact in all reports that are submitted to the Department of Inland Revenue.

National ID

Enter the contact person's national ID.

Job Title

Enter the job title of the company contact for taxation inquiries. This information appears in all the reports that are submitted to the Department of Inland Revenue.

Telephone and Fax

Enter the telephone and fax number of the company contact for taxation inquiries. This information appears in all reports that are submitted to the Department of Inland Revenue.

Associating a Reference Number with an Organizational Link

Access the Tax Data page.

Organizational Link Option

Select an organizational link. Options are: Company, Pay Group, Location, Establishment, and Department.

Load All Units

Click to insert a list of all possible organizational units into the organization link list. You can then specify the tax references number for each unit.

Effective Date and Status

Enter the effective date and status of the organization link. If the organizational link option changes, all the organizational units are deleted and all existing organizational link options become inactive.

Details

Click to view the Tax Reference Number Details page, which displays the employer details that are associated with the tax number.

Deriving Employee Tax Scales

To set up employee tax scales, use the Tax Scale Table MYS (GPMY_TAX_TBL) component.

Define tax scales.
Determine tax amounts.

Pages Used to Derive Employee Tax Scales

Page Name	Object Name	Navigation	Usage
Scale Definition	GPMY_TAX_SCALE	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Tax Scale Table MYS, Scale Definition	Define a tax scale that can change over time. Identify tax scale basis (that is, marital status, number of dependents, and spouse's employment status).
Wage Range	GPMY_TAX_RANGE	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Tax Scale Table MYS, Wage Range	Define the range of wages for each tax scale and the applicable tax amount for each range.

Defining Tax Scales

Access the Scale Definition page.

Use the Tax Scale Table to view the delivered Malaysian Tax Schedule that the system uses if you select the tax scale method.

Maximum Monthly Rate	Displays the maximum rate for the tax scale.
Percent Above Maximum	Displays the percent that applies when the wages that are applicable to the scale exceed the maximum monthly rate.

Scale Category

Single/Married	Indicates whether the scale is applicable to single or married employees.
Number of Dependents	Displays the number of dependents for the tax scale.
Wife Employed	Indicates whether the tax scale applies to married male payees with employed wives.

Determining Tax Amounts

Access the Wage Range page.

Low Range

Displays the minimum taxable wages for the specified tax amount. This amount must be less than the high range.

High Range

Displays the maximum taxable wages for the specified tax amount. This amount must be greater than the low range and cannot overlap another range.

Tax Amount

Displays the amount of tax to be withheld from a payee based on the payee's taxable wages.

Entering Employee Tax Details

This section discusses how to:

Enter payee tax details.
Enter spouse tax details.
Enter employee CP38 data.
Enter Zakat contributions.
Extract dependent data from Human Resources.

Pages Used to Enter Employee Tax Details

Page Name	Object Name	Navigation	Usage
Payee Details	GPMY_TAX_PYE	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Data MYS, Payee Details	Associate a payee with a tax reference number, enter amounts or percentages for additional taxation, and stop taxation.
Spouse Details	GPMY_TAX_SPOUSE	Global Payroll & Absence Mgmt, Payee Data, Taxes, Maintain Tax Data MYS, Spouse Details	Enter spouse tax information for married employees.
Payee CP38 Data	GPMY_TAX_CP38	Global Payroll & Absence Mgmt, Payee Data, Taxes, Define CP38 Data MYS	Define an employee's CP38 data.

Entering Payee Tax Details

Access the Payee Details page.

Tax Reference Number

Displays the employee's tax reference number. The format should be AA99999999999.

Letter Reference

Enter the letter reference that instructs the employer to stop the tax deduction for a particular employee. This data can be saved only if you select the Stop Tax check box.

Stop Tax

Select to stop the calculation of all tax for the payee except additional taxes that are specified for scheduler tax and annual tax.

Warning! Selecting the Stop Tax check box applies this feature to all future dates. To restart taxation for the next year, enter a new row with an effective date of January of that year.

Wife Employed

Select to specify that the wife of a male payee is employed. This field is hidden for female payees.

Tax Scale

Enter a value to override the tax scale that is determined automatically by the system. Use when employing the scale method.

Tax Category

Enter a value to override the tax category that is determined automatically by the system. Use when employing the formula method.

Number of Dependents

Enter a value to override the number of dependents (through the Dependent/Beneficiary pages). Use when employing the formula method.

First Form E Reporting Year

Displays the first year that a Form E was printed for a payee. This is updated by the Form E report process and is a display-only field.

Scheduler Tax Additional Amount

Enter an additional amount of tax to be withheld from the payee for scheduler tax. Either an amount or a percentage may be entered, but not both.

Scheduler Tax Additional Percentage

Enter an additional percentage of tax to be withheld from the payee for scheduler tax. Either an amount or a percentage may be entered, but not both.

Annual Tax Additional Amount

Enter an additional amount to be withheld from the payee for annual tax.

Annual Tax Additional Percentage

Enter an additional percentage to be withheld from the payee for annual tax.

Employer Tax Number

Displays the employer tax reference number to which the payee is assigned. The system generates a value that is based on the organizational link information, but the value can be overridden. This field is required for all payees.

Tax Office Branch

Enter the name of the tax office branch that handles the payee.

Entering Spouse Tax Details

Access the Spouse Details page.

ID

Enter the ID for the spouse of the payee. If you enter a value, the system supplies the remaining information, which is display-only. Otherwise, you can enter information about the spouse.

Entering Employee CP38 Data

Access the Payee CP38 Data page.

Enter the CP38 data that is sent from the Inland Revenue Board (IRB).

Tax Year	Enter the tax year to which the CP38 deductions apply.
CP38 IRB Reference Number	Enter the number that is provided by the IRB for this payee.
Total Amount to Recover	Displays the amount to be collected from the employee, specified on the letter from the IRB.
Number of Installments	Displays the number of installments that are specified on the letter from the IRB.
Recover from Bonus Payment	Enter the amount, if any, that is to be withheld from bonus payments.

Entering Zakat Contributions

Global Payroll for Malaysia enables you to manage your payees' Zakat contributions. The system can either deduct a fixed monthly amount for a payee or consider all the tax deductions as Zakat contributions. In both instances, Zakat is deducted from net pay and is applied as a rebate in the tax process.

When you use the fixed amount option, the maximum amount of Zakat tax rebate is equal to the total tax amount. If the Zakat tax rebate exceeds the total tax amount, the remaining rebate applies to subsequent months (but not subsequent years). Zakat functionality does not apply to bonus payments, except when applying excess rebates.

To enter a fixed amount of Zakat:

Access the Supporting Element Overrides page.
Enter the TAX VR ZAKAT element on the Elements/Dates tab.
Enter the begin and end dates to define the period in which the amount should be recovered.
On the Values tab, enter the monthly amount to be recovered.

To trigger a Zakat rebate equal to total tax amounts:

Access the Supporting Element Overrides page.
Enter the TAX VR ZAKAT SCH element on the Elements/Data tab.
Enter the begin and end dates to define the period in which the override applies.
Enter a character value of Y on the Values tab.

Extracting Dependent Data from Human Resources

To determine the number of dependents for tax purposes, the system extracts the following information from the Personal Profile page in Human Resources:

Relationship to payee.
Dependent or beneficiary type.
Birth date.
Marital status.
Full-time student status.
Disability.
Student — Within/Outside Malaysia.

See Also

PeopleSoft Enterprise Human Resources 8.9 PeopleBook: Administer Workforce

Setting Up BIKs (Benefits In Kind)

To set up BIKs, use the Benefits in Kind Setup MYS (GPMY_BIK_SETUP) component.

This section provides an overview of setup of BIKs and discusses how to:

Define BIKs elements.
Assign BIKs to an employee.
Define company property BIK types.
Assign BIKs to an employee.
Define BIK elements.
Maintain payee BIK information by amounts.
Maintain payee BIK information by eligibility.

Understanding Setup of BIKs

BIKs are goods, services, or property provided by the employer to the employee. BIKs are stored in Global Payroll elements. Once entered, the system uses this information to generate tax form CP8A.

To set up BIKs in the payroll system, you must:

Indicate whether company property that is assigned to an employee is considered a BIK and capture the purchase date, purchase price, market value, and life span of company property for calculation purposes using the Property Value page.
Define elements to be used for BIKs on the Benefits in Kind Setup page.
Enter payee BIK information.
Specify the period of time for which a payee receives a BIK.

Pages Used to Set Up BIKs

Page Name	Object Name	Navigation	Usage
Property Value	COMPANY_PROP_TBL2	Set Up HRMS, Product Related, Workforce Administration, Company Property, Property Value	Assign values to company property.
Company Property	COMPANY_PROP_TBL1	Set Up HRMS, Product Related, Workforce Administration, Company Property, Company Property	Identify company property, such as vehicles, computer equipment, tools, or uniforms.
Benefits in Kind Setup	GPMY_BIK_SETUP	Set Up HRMS, Product Related, Global Payroll & Absence Mgmt, Taxes, Benefits in Kind Setup MYS	Assign elements to the Amounts by Employee page and the Eligibility by Employee page.
Benefit Amounts	GPMY_BIK_AMOUNTS	Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Benefits in Kind MYS, Benefit Amounts	Enter the eligible benefits with their amounts and start and end dates.
Eligible Benefits	GPMY_BIK_ELIGIBLE	Global Payroll & Absence Mgmt, Payee Data, Taxes, Specify Benefits in Kind MYS, Eligible Benefits	Enter the eligible benefits and start and end dates.

Defining Company Property BIK Types

Access the Property pages.

Purchase Date	Enter the date of purchase.
Purchase Price	Enter the purchase price.
Benefit Value	Enter the value of the benefit to be used in calculations.
Life Span (years)	Enter the expected life span of the company property.
Benefit Type	Indicate whether the property is a BIK and, if so, the type of benefit.

See Also

PeopleSoft Enterprise Human Resources 8.9 PeopleBook: Administer Workforce

Assigning BIKs to an Employee

Access the Company Property page.

Enter the property code and issue date for the object.

See Also

PeopleSoft Enterprise Human Resources 8.9 PeopleBook: Administer Workforce

Defining BIK Elements

Access the Benefits in Kind Setup page.

Use Benefit Eligibility

Indicates whether the page enables you to enter an amount for each employee or select a check box to identify eligibility.

Sequence Number

Enter a number to specify the sequence of the elements displayed. This number determines the order in which the elements appear on the payee entry page.

Entry Type

Select the type of element.

Element Name

Enter the name of the element that is related to the benefit.

Maintaining Payee BIK Information by Amounts

Access the Benefit Amounts page.

Begin Date

Enter the entitlement's start date.

End Date

Enter the entitlement's end date or the employee's termination date. Enter proration in calendar days using the begin and end dates. The system will not calculate the BIK if the end date is before the segment end date. Termination dates are automatically considered entitlement end dates.

Note. No proration is needed for the following BIKs: group insurance benefit (INSUR BIK), interest paid by employee (INT FREE BIK), recreation and club membership (RECREAT BIK), service charge and utilities benefit (SERV UTIL BIK), and tuition and school benefit (TUITION BIK). For these benefits, the begin and end dates should span the entire year.

Amount

Enter the amount of the entitlement.

Note. When you enter the housing BIK, the system can compare the BIK to the payee's gross income. Enter the BIK as a percentage of the gross using earning HOUS BIK PCT or as an amount using earning HOUS BIK AMT. You can enter both to make the system calculate and choose the lesser value.

Maintaining Payee BIK Information by Eligibility

Access the Eligible Benefits page.

Eligible

Select if the employee is eligible for the benefit.

Begin Date

Enter the entitlement's start date.

End Date

Enter the entitlement's end date or the employee's termination date. Enter proration in calendar days using the begin and end dates. The system will not calculate the BIK if the end date is before the segment end date. Termination dates are automatically considered entitlement end dates.

Note. Benefit amounts are derived from Global Payroll Earning elements.

Reporting Tax Data

Global Payroll for Malaysia enables you to create the following tax reports:

CP22.
CP39.

See Also

Administering Inland Revenue Reporting

Registered Name	Enter the employer's official name.
Address	Enter the employer's address.
Responsible ID	Enter the employee ID of the organization's tax contact.
Name	Enter the name of the organization's contact person for taxation inquiries. This name appears as the company contact in all reports that are submitted to the Department of Inland Revenue.
National ID	Enter the contact person's national ID.
Job Title	Enter the job title of the company contact for taxation inquiries. This information appears in all the reports that are submitted to the Department of Inland Revenue.
Telephone and Fax	Enter the telephone and fax number of the company contact for taxation inquiries. This information appears in all reports that are submitted to the Department of Inland Revenue.

Organizational Link Option	Select an organizational link. Options are: Company, Pay Group, Location, Establishment, and Department.
Load All Units	Click to insert a list of all possible organizational units into the organization link list. You can then specify the tax references number for each unit.
Effective Date and Status	Enter the effective date and status of the organization link. If the organizational link option changes, all the organizational units are deleted and all existing organizational link options become inactive.
Details	Click to view the Tax Reference Number Details page, which displays the employer details that are associated with the tax number.

Low Range	Displays the minimum taxable wages for the specified tax amount. This amount must be less than the high range.
High Range	Displays the maximum taxable wages for the specified tax amount. This amount must be greater than the low range and cannot overlap another range.
Tax Amount	Displays the amount of tax to be withheld from a payee based on the payee's taxable wages.

Tax Reference Number	Displays the employee's tax reference number. The format should be AA99999999999.
Letter Reference	Enter the letter reference that instructs the employer to stop the tax deduction for a particular employee. This data can be saved only if you select the Stop Tax check box.
Stop Tax	Select to stop the calculation of all tax for the payee except additional taxes that are specified for scheduler tax and annual tax. Warning! Selecting the Stop Tax check box applies this feature to all future dates. To restart taxation for the next year, enter a new row with an effective date of January of that year.
Wife Employed	Select to specify that the wife of a male payee is employed. This field is hidden for female payees.
Tax Scale	Enter a value to override the tax scale that is determined automatically by the system. Use when employing the scale method.
Tax Category	Enter a value to override the tax category that is determined automatically by the system. Use when employing the formula method.
Number of Dependents	Enter a value to override the number of dependents (through the Dependent/Beneficiary pages). Use when employing the formula method.
First Form E Reporting Year	Displays the first year that a Form E was printed for a payee. This is updated by the Form E report process and is a display-only field.
Scheduler Tax Additional Amount	Enter an additional amount of tax to be withheld from the payee for scheduler tax. Either an amount or a percentage may be entered, but not both.
Scheduler Tax Additional Percentage	Enter an additional percentage of tax to be withheld from the payee for scheduler tax. Either an amount or a percentage may be entered, but not both.
Annual Tax Additional Amount	Enter an additional amount to be withheld from the payee for annual tax.
Annual Tax Additional Percentage	Enter an additional percentage to be withheld from the payee for annual tax.
Employer Tax Number	Displays the employer tax reference number to which the payee is assigned. The system generates a value that is based on the organizational link information, but the value can be overridden. This field is required for all payees.
Tax Office Branch	Enter the name of the tax office branch that handles the payee.

Use Benefit Eligibility	Indicates whether the page enables you to enter an amount for each employee or select a check box to identify eligibility.
Sequence Number	Enter a number to specify the sequence of the elements displayed. This number determines the order in which the elements appear on the payee entry page.
Entry Type	Select the type of element.
Element Name	Enter the name of the element that is related to the benefit.

Eligible	Select if the employee is eligible for the benefit.
Begin Date	Enter the entitlement's start date.
End Date	Enter the entitlement's end date or the employee's termination date. Enter proration in calendar days using the begin and end dates. The system will not calculate the BIK if the end date is before the segment end date. Termination dates are automatically considered entitlement end dates.