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INDIVIDUAL TAX CLEARANCE APPLICATION PROCEDURE

INDIVIDUAL TAX CLEARANCE APPLICATION PROCEDURE

What  is Tax Clearance Letter (TCL) ?

It is an approval by Inland Revenue Board of Malaysia (IRBM) to the employer on deceased / retiring / resigning employee’s tax liability in order for employer to make final payment of salary / compensation / gratuity to the said employees.

 

Why TCL Is Being Issuing?

  • Employee must submit their income return form on or before the date mentioned in ITA 1967 so the final tax position will be finalized and released 
  • Settlement of all the outstanding tax amount must be done before the employee resign / cease or leave the country

 

When Should the Employer Apply for TCL?

  • Employee is about to retire
  • Employee is ceases employment
  • Employee is about to leave Malaysia permanently or for a period of more than 3 months
  • Death

 

Employer do NOT require notification about the employee ceasing employment if :

  • Employee is subject to MTD and deduction has been made by the employer
  • Employee`s remuneration is less than the minimum income subject to MTD
  • Employer is aware that the employee is to be employed elsewhere in Malaysia

 

Procedure of Application

  • Notification to IRBM of cessation / retirement of employee 1 month before cessation of employment
  • Notification to IRBM not more than 1 month before the date of employee intending to leave Malaysia
  • Withhold money payable to the employee until they receive a Clearance Letter from the Assessment Branch
  • Employer complies with the Tax Clearance Letter

 

Platform of Application

  • Hard copy form submit to nearest IRBM branch

 

 

PENALTY /FINE

  • Failure to notify IRBM will render an employer liable to prosecution and on conviction, liable to a fine of not less than RM200 and not more than RM2,000 or to imprisonment for a term not exceeding six months or to both.
  • The employer will also be responsible for any tax due from the above-mentioned employee.

 

Source from: 

http://www.hasil.gov.my/bt_goindex.php?bt_kump=50&bt_skum=1&bt_posi=1&bt_unit=3&bt_sequ=3 

 

 

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