Perquisites in Malaysia: A Tax Guide for Employees (2024 Update)

July 11, 2024

Perquisites in Malaysia: A Tax Guide for Employees (2024 Update)

Ever wondered if the cool perks your company offers, like a gym membership or a company laptop, affect your taxes? In Malaysia, these benefits are classified as “perquisites,” and depending on their nature, they might be subject to income tax.

What are Perquisites?

Perquisites (often shortened to “perks”) are benefits you receive as an employee, either in cash or kind, for having a job or performing your duties. This can include anything from a mobile phone and data plan to free lunches or discounted travel arrangements. The key thing to remember is that perquisites that can be converted into cash are considered part of your gross income and therefore taxable in Malaysia.

Understanding the Phases of Perquisites:

Convertible into Money: If you can sell, trade, or exchange the perk for cash, it likely has tax implications.
Having an Employment: Do you get the perk simply for being employed, even if you’re not actively working? It could still be taxable.
Exercising an Employment: This perk relates to your job duties, even if some of those duties are performed outside of Malaysia (as long as the company itself is based in Malaysia).

Characteristics of Perquisites:

Frequency: Regular or occasional perks can be taxable.
Cash or Kind: Both cash and non-cash benefits with a monetary value count.
Contractual or Voluntary: It doesn’t matter if the perk is part of your employment contract or a voluntary benefit from your employer (or even a third party).
Taxability: Perquisites are only taxable if they’re related to your employment.

Common Types of Perquisites in Malaysia:

This list provides a glimpse into the variety of perks that might be considered taxable:

Cash Benefits: Employer-paid bills (phone, electricity and water bill), loan interest payments, or income tax payment on your behalf.
Non-Cash Benefits: Credit card facilities, club memberships, tuition fees for your children, life insurance premiums, services like a gardener, driver domestic help or guard, professional subscriptions, waivers on loans or advances, scholarships, discounted or free assets, gift vouchers, and even company-provided computers!
Awards and Payments: Awards like “excellent public service” or termination payments (buy-out payments) might also be taxable.

Important Note:

This list isn’t exhaustive, and Malaysian tax regulations can be complex. If you’re unsure about the tax implications of a specific perk, it’s always best to consult with a qualified tax professional to get personalized advice.

By understanding perquisites and their tax implications, you can ensure accurate tax filing and avoid any unexpected tax liabilities.