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
- IRBM Website ezHASiL -> e-SPC (https://ez.hasil.gov.my/ci/Login.aspx?page=14)
- 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
