It is the time of the year again for the HR Personnel or Business Owners to start preparing the tax return documents.
What's a tax return?
The tax return process is the process of the company and the employee (taxpayer) declaring their income statement (employee) or employee information (employer) to LHDN. The company is obligated to prepare a set of annual statutory forms provided to the employee and for the company to allow the employee and the company to use the information in the annual statutory forms to fill out the tax return form.
Failure to provide the annual statutory forms, the company will be facing penalties or imprisonment, or both.
What do I need to prepare for the annual statutory forms?
Every year, the HR Personnel or Business Owner will need to prepare 4 annual statutory forms. List of annual statutory forms as below:
- EA form:
EA form summarises the employee's income, benefits, tax, statutory contributions, and tax-exempt details. This form will need to be distributed to the active and resigned employee that has been employed within that particular calendar year.
- PCB2 (II) form:
PCB2(II) form is a letter confirming that the employer has made all of the relevant deductions for a given year. This form will only be given to those employees who have been paying income tax. Those employees who are not eligible to pay taxes will not get this.
- E form (Borang E)
E form (Borang E) is the declaration report submitted by every employer to inform the LHDN of the total number of employees, the number of newly hired, and a list of employees' income details for the year.
- E-data Praisi
E-data Praisi is a report for the company to declare each of every employee's income details (taxable and tax exempted income such as salary, allowances, commission, bonuses, BIK, etc) in the E-data Praisi website.
Once the company has submitted the report, the data in the report will be synced with the employee's tax account and helps to pre-filled the employee's e-BE form (tax filing form), so when the employee logs into their online tax account for the tax return, they will able to see the pre-filled details.
It is also the latest alternative to replace the CP8D form, where the CP8D form doesn't help to pre-fill the e-BE form for employees.
It is very important for the company and employees to submit the correct information during the tax return to avoid any unnecessary issues from the authorities.
To ensure you get the right information for the tax return, we have summarised the 6 steps we recommend before you download these statutory documents below.
6 Important Steps to Prepare the EA form, E form, E-data Praisi & PCB2(II) form
Step 1: Ensure that the employees’ aggregated payroll data is correct.
If you have been using altHR Payroll since January 2022 or earlier than this:
Congratulations! You do not need to input the aggregated amount thing at all for most of your employees.
Here are 2 ways that you can double-check the aggregated payroll data:
- Method 1: View and confirm the monthly payroll summary of each employee
- Method 2: Download the Payroll Report for each month or the Yearly Payroll Report
If you only start using altHR Payroll in the middle of the year:
In the event you have selected to run payroll from the month you join altHR (which is not January 2022):
For example, if you are a new payroll user who started to use altHR Payroll in August 2022, and happens that you did not run payroll for January 2022 to July 2022 in altHR OR you did not perform the previous pay run import to altHR's payroll, you will only have the payroll input from August 2022 to December 2022.
So, in that case, when you generate the EA form, the system will only have the data from August 2022 onwards, and the EA form only will have the payroll data from August 2022 to December 2022.
How can you check this?
Kindly go to your Payroll > Summary, from the dropdown list, you will able to see which month payroll data for 2022 you have processed in altHR
What to do if you do not have a complete year of payroll in altHR?
As mentioned above, altHR is only able to generate the payroll data that has been input or processed in altHR. If you do not have the complete year of payroll data in altHR, you will need to prepare another set of EA forms.
- If you are using another payroll system before altHR: You can use the EA forms that you have downloaded from their platform.
- If you have been doing it manually: You can prepare the EA form by filling it in using the excel template available on the LHDN website.
**This situation is not applicable if your company is only newly incorporated this year and your company does not have a complete year of payroll.
In the event you have selected to run / input payroll from January 2022:
You will have payroll data for all the months. The system will prepare for the whole year when you generate the EA form after you have run and confirmed the December 2022 payroll.
In the event that you did not perform December 2022 payroll processing:
If your company did not run a complete year of payroll in altHR and requires the EA form for the months that you have processed with altHR, please contact the Payroll Support Team at firstname.lastname@example.org to request the EA form and the other annual statutory forms.
Step 2: Ensure the December 2022 payroll is run correctly.
Please run the payroll correctly for December 2022 before you download the annual statutory forms.
Step 3: Ensure pay items are tagged to the correct EA fields.
Please ensure that all the pay items you have added for the employees are tagged to the correct EA fields, especially when you have added your own custom pay items for your company. Learn more to understand the EA fields.
If you wish to edit or change the EA fields of the pay items, please refer to Steps 4 - 5 of this article: How to add new pay items in payroll settings.
Step 4: Ensure that you have input the receipt and receipt date after each pay run for PCB2(II) Form purposes.
Here’s a step-by-step guide: How to add receipts for PCB and CP38 for LHDN payment.
Please ensure that you have input them and the best practice is always to key in right after your pay run.
Step 5: Ensure that you have updated the Officer's Information
In the EA form / PCB2(II) / E Form, there is a specific field at the bottom that indicates the person in charge or company representative information (see screenshot below), you will need to ensure to update the officer's information - Learn about How to fill in officer's information for statutory forms
Step 6 (Final): You can now generate and download your EA form, E form and PCB 2(II) report.
After you have completed all the steps above, you can now generate the EA form, E form, E-Data-Praisi, and PCB 2(II) report that is most accurate.
Last but not least, you may now do a final check on the said forms before sending them to your employee/company.
You may now send the EA form to employees, by email, or by printing it out hardcopy.
You are encouraged by LHDN to submit the E-data Praisi via https://ez.hasil.gov.my/CI/
When do I need to provide the forms or do the tax return?
- EA form & PCB2(II) form - The company MUST distribute the EA form to all employees, and the PCB 2 (II) form to those employees who have been paying tax by latest by end of February - usually the tax return (e-filing) period open to the taxpayer is around March to April (sometimes extending to May).
- E Form & E-data Praisi - Usually the LHDN will open the E Form & E-data Praisi submission window from March until April (sometimes extended to May), so the company has about 2 months duration to submit both forms into the company's tax account. Kindly stay tuned for the update from LHDN!
Looking at the tax return season usually starts in March, we strongly encourage all HR Personnel or Business Owner to start the preparation as early as possible to ensure a smooth process for tax return submission.
Should you run into any of the following issues:
If you find that the EA fields/numbers or Employee information are not correct, please go through Step 3 above. If you’ve done the above correctly, you should have the EA/E form numbers correct.
If you find that the PCB 2(II) report is not reflecting correctly, kindly ensure that you’ve already done your part in Step 4 above.
If you still have issues that you can’t resolve, kindly contact us at email@example.com and use this email subject, “2022 Payroll Annual Statutory Forms Issue".