How to File Income Tax in Malaysia

Every year, income tax filing becomes a key responsibility for millions of Malaysians. While employees are required to submit their own tax returns, employers and HR teams play an important supporting role in ensuring the process runs smoothly. Understanding how income tax filing works helps organisations reduce compliance risks, support employees better, and avoid unnecessary disputes during tax season.

Malaysia’s income tax filing process is now fully digital and managed through MyTax and the e-Filing platform operated by Lembaga Hasil Dalam Negeri Malaysia (LHDNM).

Who Needs to File Income Tax in Malaysia

Income tax filing is not limited to salaried employees. In general, individuals are required to file income tax if they fall within any of the following categories:

Salaried employees earning above the taxable threshold
Individuals earning more than RM37,333 annually after EPF deductions
Freelancers and gig workers, including e-hailing drivers and delivery riders
Self-employed individuals and business owners
Individuals who have been registered with LHDNM and issued a tax number
Employees with multiple income sources, such as salary plus rental or freelance income

Even if no tax is ultimately payable, individuals with an active tax file may still be required to submit a return.

Income Tax Filing Deadline in Malaysia

Income tax is assessed annually based on the calendar year. The common filing period is March to April for most individual taxpayers

e-Filing offers a longer submission window compared to manual filing, which is why it is strongly encouraged by LHDNM.

Late submission may result in penalties or fines, depending on the severity and duration of the delay. Employers should encourage employees to file early to avoid last-minute issues.

Essential Documents Needed for Tax Filing

Before filing income tax, individuals should gather all relevant documents to ensure accurate reporting.

Commonly required documents include:

EA Form, issued by the employer
EPF contribution statement
Insurance and takaful statements
Lifestyle-related receipts (devices, education, medical expenses, etc.)
Donation receipts (if applicable)
Business income and expense records for freelancers or self-employed individuals

Important: All receipts and supporting documents must be kept for at least seven (7) years, as required by LHDNM for audit purposes.

How to Register Income Tax Number with LHDNM

Individuals who are filing income tax for the first time must first register for a tax file number. Registration is done online through MyTax via the e-Daftar system. This applies to:

New employees
Freelancers and self-employed individuals
Anyone who has never been issued a tax number

Once registered and approved, LHDNM will issue a Tax Identification Number, which is required before any tax return can be submitted.

How to File Income Tax in Malaysia (MyTax e-Filing)

Income tax filing is completed through the MyTax e-Filing system.

The general process includes:

Log in to MyTax
Select the correct tax form (BE, B, or others depending on income type)

Enter employment income based on the EA Form

Declare other income sources, if any
Claim eligible tax reliefs

Review the tax summary

Submit the return
Save the acknowledgement slip for records

From an HR perspective, it is critical that payroll data and EA Forms issued to employees match the records submitted to LHDNM.

Types of Income: Taxable vs Exempt

Not all income is taxable under Malaysian tax law.

Common Taxable Income

Salary and wages
Bonuses and commissions
Fixed allowances
Business and freelance income
Rental income
Overseas interest income brought into Malaysia

Common Tax-Exempt Income

Dividends from Malaysian companies
EPF dividends
Hibah and inheritance
Gifts not related to employment
Certain government allowances

Understanding this distinction helps reduce reporting errors and unnecessary overpayment.

Tax Reliefs Malaysians Can Claim

Tax reliefs are designed to reduce chargeable income, which in turn lowers the total tax payable. Common relief categories include:

Individual relief
Spouse and child relief
Lifestyle purchases
Medical expenses
Education fees
Approved donations

Relief limits and eligibility may change from year to year. Taxpayers should always refer to the official LHDNM relief list for the latest updates.

EPF & Life Insurance Tax Relief (Important Section)

EPF-related reliefs are among the most commonly claimed deductions.

EPF and Life Insurance Relief Limits

EPF contributions: up to RM4,000
Life insurance or takaful premiums: up to RM3,000
Combined maximum relief: RM7,000

Need to check your tax relief total? Just use our EPF & insurance relief calculator.

For Pensionable Public Servants

Pensionable public servants may claim life insurance premiums and voluntary EPF contributions under the allowed relief categories.

i-Lindung EPF Insurance

Insurance or takaful plans purchased through the i-Lindung platform may qualify under life insurance relief, subject to LHDNM approval.

EPF Dividends

Dividends earned on EPF savings are fully tax-exempt and do not need to be declared as income.

Common Tax Filing Mistakes to Avoid

Mistakes during tax filing can trigger audits or penalties. Common issues include:

Failing to declare all income sources
Using incorrect EA Form details
Claiming reliefs without valid receipts
Overclaiming tax relief amounts
Not keeping records for seven years
Submitting tax returns after the deadline

Employers can help reduce these errors by issuing accurate payroll documentation on time.

Why This Matters for HR & Employers

Income tax filing is not just an individual responsibility. Employers play a critical supporting role. For HR and employers, accurate tax processes:

Ensure EA Forms are correct and consistent
Reduce employee tax disputes
Improve compliance during audits
Build employee trust and confidence
Support smoother tax season communication

When payroll data aligns with MyTax records, both employers and employees benefit.

External References

For official guidance and updates:

FAQs

Who must file income tax in Malaysia?

Individuals earning above the taxable threshold or registered with LHDNM.

How do I file income tax for the first time?

What documents are required for e-Filing?

EA Form, EPF statement, insurance records, receipts for reliefs, and income records.

How much EPF contribution is tax-deductible?

Up to RM4,000 for EPF contributions, with a combined EPF and life insurance relief of up to RM7,000.

What happens if income tax is filed late?

Late filing may result in penalties or fines imposed by LHDNM.

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