As an entrepreneur or an existing business owner in Malaysia, it is important and never too late to learn about compliance and basic legal related matters regarding starting and maintaining a company’s operations. Here we put together brief profiles of government agencies in Malaysia that may be regulatory authorities or to provide aid to local businesses and companies:
Suruhanjaya Syarikat Malaysia (SSM) or Companies Commissions of Malaysia (CCM)
As a result of a merger between Registrar of Companies (ROC) and the Registrar of Businesses (ROB) in April 2002, SSM is a statutory body that regulates companies and businesses in Malaysia. It serves as the leading authority to ensure compliance within business and company registration as well as monitor corporate legislations through enforcement activities. Members of the public who have intentions to register a company or business will have to do so directly with SSM or via a service provider.
- Website: https://www.ssm.com.my/
- Email (General enquiries): [email protected]
- Telephone: 603 7721 4000
Kumpulan Wang Simpanan Pekerja (KWSP) or Employee Provident Fund (EPF)
Established in 1951, KWSP behaves as a savings institution for employees in Malaysia, with the main goal for employees to provide employees social security for retirement, in accordance with Employees Provident Fund Act 1991. It is Malaysia’s largest savings institution, with assets over RM 900 million as of 2019. KWSP is primarily committed to defend and grow all members’ retirement savings via carefully selected investments, and has expanded to also provide aid to national infrastructural developments. The monthly KWSP contribution from an employee is 9% of the employee’s monthly salary and 13% of the employee’s monthly salary is contributed from employers.
- Website: https://www.kwsp.gov.my/
- Telephone: 603 8922 6000
Lembaga Hasil Dalam Negeri (LHDN) or Inland Revenue Board of Malaysia (IRBM)
Established as Inland Revenue Depart of Malaysia in 1996, the agency under the Ministry of Finance Malaysia is now formally known as LHDN or IRBM. It is one of the main sources of revenue for the ministry to implement and operate the tax management system. Aside from administering and assessing payment of most taxes, LHDN also acts as an advisor to the government as well as a representative of Malaysia to participate in matters related to taxation. There are several legislation that is governed by the agency, such as Income Tax Act 1967, Real Property Gains Tax Act 1976 and Labuan Business Activity Tax Act 1990. As of 2020, companies with paid up share capital below RM 2.5 million are taxed 17% of the revenue for the first RM600,000, and 24% for the remaining balance. Companies with paid up share capital exceeding RM 2.5 million are taxed at 24% of the revenue.
Pertubuhan Keselamatan Sosial (PERKESO) or Social Security Organisation (SOCSO)
PERKESO is a government department under the Ministry of Human Resources in Malaysia, and it aims to enforce employees’ social security as suggested. There are two parts of contributions to be collected from employees and employers:
(1) Employment Injury and Invalidity Scheme and
(2) Employment Insurance Scheme.
- Employment Injury and Invalidity Scheme
This scheme provides protection to all employees against accidents and occupational diseases that take place during employment. Beneficials are entitled to several benefits namely Medical benefits, Temporary Disablement benefit, Permanent Disablement Benefit among others. This scheme is applicable to all Malaysian and permanent resident employees between 18 and 60 years of age, unless the contribution begins at the age of 55 and above. Every month, the employer contributes 1.75% of the employee’s monthly salary, up to a maximum value of RM69.05, whereas the employee contributes 0.5% of the employee’s monthly salary, up to a maximum value of RM19.75.
- Employment Insurance Scheme (EIS)
This scheme is the most recent addition of deduction from many employee’s payslip in 2018, shortly after the Employment Insurance System Bill 2017 was passed in Malaysian House of Parliament. It is a financial scheme with the objective to provide temporary financial assistance for employees who have been retrenched until a new employment is found or up to six months. It is applicable to employees in the private sector aged between 18 to 60 years of age, unless the contribution only begins at the age of 57 and above. The contribution rate is 0.2% from employers and 0.2% from employees, making up to a total amount of 0.4% of the employee’s monthly salary and the rates are capped at a monthly salary of RM4,000. Civil and domestic servants as well as self employed individuals are exempted from this scheme.
Be well Informed
There are high chances that the agencies and government departments listed above are some among the others that will be a part of your company and business journey to be fully compliant. While you are spending your time educating yourself on the legal matters for your company, let Quadrant Biz Solutions help you with your company secretarial matters. Contact us today!