Employment Income


Employment income is regarded as derived from Malaysia and subject to Malaysian tax where the employee:

  • exercises an employment in Malaysia;
  • is on paid leave which is attributable to the exercise of an employment in Malaysia;
  • performs duties outside Malaysia which are incidental to the exercise of an employment in Malaysia;
  • is a director of a company resident in Malaysia; or
  • is employed to work on board an aircraft or ship operated by a person who is resident in Malaysia. 


Exemption (short-term employees)

Income of a non-resident from an employment in Malaysia is exempt:

  • if the aggregate of the period(s) of employment in Malaysia does not exceed 60 days in a calendar year; or
  • where the total period of employment which overlaps 2 calendar years does not exceed 60 days.


Employees of regional operations

Non-Malaysian citizens who are based in Malaysia working in an Operational Headquarter, or Regional Office, or International Procurement Centre, or Regional Distribution Centre or Treasury Management Centre status company would be taxable on employment income attributable to the number of days they exercise employment in Malaysia.


Women returning to work after career break

The employment income for women returning to work after a career break of at least 2 years is exempted for up to a maximum of 12 consecutive months (application to Talent Corporation Malaysia Berhad by 31 December 2023) and the exemption period is until YA 2024.

Types of employment income

Type of employment income

Taxable Value

Cash remuneration, e.g. salary, bonus, allowances / perquisites

Total amount paid by employer. Certain allowances / perquisites are exempted from tax. Refer to “Perquisites” below

Benefits-in-kind, e.g. motorcar and petrol, driver, gardener, etc

Based on formula or prescribed value method. Certain benefits are exempted from tax. Refer to “Benefits-in-kind” below

Housing accommodation (unfurnished)

  • employee or service director
  • directors of controlled companies


Lower of 30% of cash remuneration* or defined value of accommodation

Defined value of accommodation

Hotel accommodation for employee or service director

3% of cash remuneration*

Withdrawal from unapproved pension fund

Employer’s contribution

Compensation for loss of employment

Total amount paid by employer. Exemption is available under specified conditions

* Cash remuneration does not include equity-based income



Below are examples of taxable perquisites:


Taxable Value

Petrol card / petrol or travel allowances and toll rates

Total amount paid by employer.
Exemption available up to RM6,000 per annum if the allowances / perquisites are for official duties*

Childcare subsidies / allowances

Total amount paid by employer. Exemption available up to RM2,400 per annum*

Parking fees / allowances

Fully exempted*

Meal allowances

Fully exempted*

Interest on loan subsidies

Loans totalling RM300,000 for housing / passenger motor vehicles and education*

Income tax borne by employer

Total amount paid by employer


Total amount paid by employer. Exemption available up to RM2,000 per annum for the following types of award:*

  • long service (more than 10 years of employment with the same employer)
  • past achievement
  • service excellence, innovation, or productivity award

* Exemptions are not extended to directors of controlled companies, sole proprietors and partnerships

Benefits-in-kind (BIK)

The value of BIK provided for an employee may be determined by either of the following methods:

  • formula method, or
  • prescribed value method

Under the formula method, the annual value of BIK provided to an employee is computed using the following formula:

The prescribed lifespan for various benefits are as follows:


Prescribed average lifespan (Years)




  • Air-conditioner


  • Curtains & carpets


  • Furniture


  • Refrigerator


  • Sewing machine


Kitchen utensils / equipment


Entertainment and recreation:

  • Organ


  • Piano


  • Stereo set, TV, video recorder, CD / DVD player


  • Swimming pool (detachable), sauna


  • Miscellaneous


Under the prescribed value method, the following are some prescribed values of BIK:


Value per year

Household furnishings, apparatus & appliances:


  • Semi-furnished with furniture in the lounge, dining room and bedroom


  • Semi-furnished as above and with air-conditioners or carpets or curtains


  • Fully furnished


  • Service charges and other bills (e.g. water, electricity)

Charges and bills paid by employer

Prescribed value of other benefits:

  • Driver

RM7,200 per driver

  • Domestic servants

RM4,800 per servant

  • Gardeners

RM3,600 per gardener

  • Corporate recreational club membership

Membership subscription paid by employer


The following are some exemptions* for certain BIK:



Leave passages

  1. one overseas leave passage up to a maximum of RM3,000 for fares only; or

  2. 3 local leave passages including fares, meals and accommodation

Employer’s goods provided free or at a discount

Exemption up to RM1,000 per annum. Any benefit exceeding RM1,000 will be subject to tax

Employer’s own services provided full or at a discount

Fully exempted

Maternity expenses & traditional medicines

Fully exempted

Telephone (including mobile telephone), telephone bills, pager, personal data assistant and broadband subscription

Fully exempted, limited to one unit for each asset

Exemption for mobile phones, laptops, and tablets provided by employers to employees (Flexible Work Arrangement Incentive)

Exemption is available up to RM5,000 from YA 2020

* Exemptions are not extended to directors of controlled companies, sole proprietors and partnerships

Standard rates for motorcar and fuel provided:

Cost of car (when new) (RM)

Annual prescribed benefit

Motorcar (RM)

Fuel* (RM)

Up to 50,000



50,001 – 75,000



75,001 – 100,000



100,001 – 150,000



150,001 – 200,000



200,001 – 250,000



250,001 – 350,000



350,001 – 500,000



500,001 and above



* Employee is given a choice to determine fuel benefit based on annual prescribed rates or exemption available for petrol usage


Collection of tax

  • Taxes are collected from employees through compulsory monthly deductions from remuneration by the 15th of the following month under the Monthly Tax Deduction (MTD) system.
  • Total remuneration including BIK and value of accommodation provided to employees is subject to MTD.
  • Individuals receiving non-employment income are required to pay by compulsory bi-monthly instalments.


Contact us

PwC Malaysia

General enquiries, PwC Malaysia

Tel: +60 (3) 2173 1188

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