Tax Clearance Letter: CP21, CP22, CP22A, & CP22B 2025 [Free Download Forms]

When an employee resigns, retires, or leaves Malaysia, employers have an important responsibility, tax clearance.

Without it, final salary payments may be delayed, and employers could face penalties.

The tax clearance process ensures that employees settle their tax obligations before they officially leave their jobs or the country.

This article will give you insights on what kind of tax clearance letter you need, the differences, and how to submit them. Learn the details below.

What is a Tax Clearance Letter?

A Tax Clearance Letter (TCL) is an official document issued by the Inland Revenue Board of Malaysia (LHDN) that confirms whether an employee has any outstanding taxes.

Employers need this letter before making the employee’s final salary payment, including compensation or gratuity.

When is a Tax Clearance Letter Needed?

Employers must apply for a tax clearance letter in these situations:

When an employee resigns from the company.
When an employee retires.
If an employee passes away.
When an employee leaves Malaysia for more than three months.

If the tax clearance is not completed, employers may face legal and financial consequences, including being held responsible for any unpaid taxes of the departing employee.

How to Request a Tax Clearance Letter

Employers must apply for a tax clearance letter to LHDN by completing the relevant tax forms. These forms are:

CP21: For employees leaving Malaysia.
CP22: For new employees.
CP22A: For private sector employees who are resigning, retiring, or have passed away.
CP22B: For public sector employees who are resigning, retiring, or have passed away.

Employers can submit these forms online via e-SPC, by hand, or by post. Processing typically takes up to 14 working days, provided all required information is accurate.

CP21 for Employees Leaving Malaysia and Free Download Form 2025

CP21 is a tax clearance form used when an employee is leaving Malaysia for more than three months.

Employers must notify LHDN at least 30 days before the employee’s departure.

This tax clearance used:

If an employee is permanently leaving Malaysia.
If an employee is relocating overseas for a new job.
If an employee is going on a long-term assignment abroad.

As an employer, you need to provide these things to submit the tax clearance:

The employee’s personal details.
The departure date.
The employee’s tax details (including income tax deductions).

Employers must submit CP21 at least 30 days before the employee leaves Malaysia.

All pending salary payments must be put on hold until tax clearance is completed.

If the employee owes tax, the employer should deduct the outstanding amount from their final salary and submit it to LHDN.

Free Download CP21 Form

CP22 for New Employees and Free Download Form 2025

CP22 is a notification form that employers must submit when hiring a new employee. This informs LHDN about the new employee’s tax status.

This form must be submitted within 30 days of hiring a new employee. It helps LHDN track employees’ tax contributions.

Employers need to complete CP22 with the employee’s details. Submit it by hand or by post to LHDN.

Free Download CP22 Form

CP22A For Private Sector Employees and Free Download Form 2025

CP22A is used for employees in the private sector who are resigning, retiring or have passed away.

Employers must submit CP22A at least 30 days before the employee leaves or within 30 days after their death.

CP22A has some differences with CP22. Below are the details:

Form	Purpose	Submission Timeline
CP22	For new employees	Within 30 days of hiring
CP22A	For resigning, retiring, or deceased private-sector employees	30 days before leaving or within 30 days of death

To submit the CP22A, employers need to attach the employee’s final salary statement and tax deduction records.

Free Download CP22A Form

CP22B For Public Sector Employees & Free Download Form 2025

While CP22A is for employees in the private sector, CP22B is for employees in the public sector who are resigning, retiring or have passed away.

Employers need to submit CP22B within 30 days before cessation of employment or within 30 days of an employee’s death.

CP22B has some differences with CP22. Below are the details:

Form	Purpose	Submission Timeline
CP22	For new employees	Within 30 days of hiring
CP22B	For resigning, retiring, or deceased public-sector employees	30 days before leaving or within 30 days of death

Hold the final salary payment until tax clearance is completed.

Free Download CP22B Form

How to Process Tax Clearance Process for Employers

Handling tax clearance efficiently helps both employers and employees avoid delays and penalties. Here’s how the process works:

1. Identify the correct form

Determine whether CP21, CP22, CP22A, or CP22B is needed based on the employee’s situation.

2. Submit the form to LHDN

CP21 (for employees leaving Malaysia) must be sent 30 days before departure.
CP22 (for new employees) must be submitted within 30 days of employment.
CP22A & CP22B (for resignations, retirements, or deaths) must be submitted 30 days before cessation of employment or within 30 days of an employee’s passing.

3. Wait for LHDN’s processing

Processing typically takes 14 working days. If additional details are required, delays may occur.

4. Receive the Tax Clearance Letter

Once LHDN issues the TCL, employers can release final salary, gratuity, or other payments to the employee.

5. Deduct outstanding taxes (if applicable)

If an employee has unpaid taxes, the employer must withhold the amount and pay it directly to LHDN.

What Happens if Tax Clearance is Not Obtained?

If an employer fails to submit tax clearance forms, several issues can arise:

Legal Penalties

Employers may be fined between RM200 to RM20,000 or face six months of imprisonment.

Employer Becomes Liable for Unpaid Taxes

If the tax clearance process is not completed, LHDN can hold the employer responsible for any outstanding taxes.

Delays in Employee’s Final Payment

Employees may face difficulties receiving their last salary, EPF withdrawal, or compensation if the clearance is incomplete.

How Employers Should Handle Tax Clearance for Departing Employees

When an employee resigns, retires, or relocates, employers must handle tax clearance properly to avoid penalties.

LHDN requires timely submission of the correct forms and withholding of final payments until tax obligations are settled.

Employer Responsibilities

Notify LHDN using the correct tax clearance form before the deadline.
Withhold final salary or gratuity until the Tax Clearance Letter (TCL) is received.
Verify tax details to prevent delays due to errors in salary, departure dates, or employee records.
Assist employees by informing them about their tax obligations and deadlines.

Required Forms and Submission Timeline

CP21: For employees leaving Malaysia (submit 30 days before departure).
CP22: For hiring new employees (submit within 30 days of employment).
CP22A: For private sector employees leaving the company (submit 30 days before departure).
CP22B: For public sector employees resigning, retiring, or passing away.

From 1 January 2025, CP21, CP22A, and CP22B must be submitted via e-SPC on MyTax.

Processing takes 14 working days, and employers should track the status to avoid delays.

Common Issues and Mistakes with Tax Clearance

Many employers make mistakes when handling tax clearance. Here are some common errors and how to avoid them:

Late Submission

Missing the deadline for form submission may result in penalties.

To avoid penalties, employers should use HR software or calendar reminders to track tax clearance deadlines.

Assigning a responsible HR staff member to oversee tax clearance can also help prevent delays.

Incorrect Information on Forms

Inaccurate salary details, incorrect departure dates, or errors in employee records can lead to delays.

Employers must carefully review all information before submitting the forms.

Not Withholding Final Payments

Some employers release salaries before receiving the Tax Clearance Letter, which can lead to legal issues.

It’s important to wait for LHDN’s approval before making any payments.

FAQs

When do I need to submit CP21, CP22, CP22A, or CP22B?

Each form has different submission deadlines:

CP21: 30 days before an employee leaves Malaysia.
CP22: Within 30 days of a new hire’s start date.
CP22A/CP22B: 30 days before employment cessation or within 30 days of an employee’s passing.

What happens if my employee leaves without completing the tax clearance?

If tax clearance is incomplete, the employer may be held responsible for outstanding taxes and could face penalties.

Is tax clearance required for foreign employees leaving Malaysia?

Yes, foreign employees must complete tax clearance if they are leaving Malaysia for more than three months. Employers must submit CP21 at least 30 days before their departure to avoid legal issues.

How long does the tax clearance process take?

Typically, 14 working days, but delays can occur if additional verification is needed.

Can an employee request a tax clearance letter after they have left the country?

Yes, but the process may be more complicated. The employer must still submit the required forms, and the employee may need to appoint a representative in Malaysia to handle the process. Outstanding taxes must be settled before LHDN issues the Tax Clearance Letter.

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