Malaysia Tax Guide: What is and how to submit Borang E (Form E)?

65,392 employers were fined and/or imprisoned for not submitting Borang E in the Year of Assessment 2014. Don’t be part of this statistic for the new year. 

As a business in Malaysia, you’ll want to avoid a fine of RM 200 – RM 20,000 and/or a maximum of 6-month imprisonment term under the Income Tax Act Section 120(1)(b). Furthermore, you’ll want to ensure that you file the form online. That’s because Lembaga Hasil Dalam Negeri (LHDN) / Inland Revenue Board of Malaysia (IRB) mandated this practice for the Year of Assessment (YA) 2018 and onwards.

Feeling nervous? Figuring out how to file Borang E can be an overwhelming annual process that requires a lot of re-learning each year. That is why it is extremely important to understand the ABCs of Borang E. 

So, here’s a comprehensive recap of all that you need to know about Borang E and how to submit it.

1. What is Borang E? And who must I file it for?

It is a declaration report and it is submitted by every employer to LHDN every year; it serves to report:

1. Total number of employees within the company;
2. Number of new hires;
3. Employer’s details;
4. Each employee’s details;
5. A list of each employee’s income details;
   • Those with annual gross remuneration of RM 34,000 and above.
   • Those with monthly gross remuneration of RM 2,800 and above (including bonuses, except previous years’ salary arrears).

What if some of my employees’ income is less than the stipulated? In that case, you should indicate a “0” in part A of the employee data section.

Contracted employees or part-timers: do I need to report in Borang E as well? Yes. From interns to contracted employees, part-timers to full-timers; all individuals employed in any kind of arrangement under your company must have their details reported in the form accordingly.

What about employees who have quit work and left Malaysia?

• If you’re the employer, you will need to give notice of said employee leaving Malaysia 3 months or more. This notice has to be given to the LHDN branch where the employee’s income tax file is located; this is so the Certificate Tax Settlement can be issued. 
• You will also need to withhold the employee’s salary due to tax settlement purposes. This notice must be done within one month before the day the employee leaves Malaysia. However, you do not have to give out notice if the employee is on a regular basis of travel.

2. When is the deadline and who should submit the form?

As of 2022, the deadline for filing Borang E in Malaysia is:

• March 31 for manual submission
• April 30 for electronic filing i.e. Form e-E

All companies must file Borang E regardless of whether they have employees or not. Any dormant or non-performing company must also file LHDN E-Filing. All partnerships and sole proprietorships must now file this form as well.

LHDN no longer accept manual submissions from companies. However, why is there a deadline for manual submission? That is because employers who are not companies have the option to submit Form E either via e-Filing or paper form.

What if a company proceeds with a paper/manual submission of the tax form? In that case, LHDN has the right to not accept the submission under subsection 83(1B) of the Income Tax Act 1967 (ACP 1967).

3. How do I submit Borang E?

Firstly, an employer must register the Employer (“E”) file first. Furthermore, because LHDN no longer accepts manual forms, all PCB calculations have to be done online. Hence, it’ll be good for a company to use an online payroll system that is PCB-compliant and Borang E-ready.

To check whether a payroll software is legitimately PCB-compliant and Borang E-ready, see that it is approved and certified by LHDN. After all, this is the safest way to ascertain that the payroll software you want to use is safely compliant with employment requirements in Malaysia for tax filing purposes like Borang E. 

One Borang E-ready software you can consider from the list is Talenox. 

Talenox is a self-service HR SaaS that helps thousands of companies avoid penalisations and audits by accurately auto-calculating their salaries and taxes for free. With Talenox Payroll, you can submit Borang E in just 3 steps:

1. Head over to Payroll > Payroll Settings > Form E.  Click on “Generate Form E for 2020″.
2. Double-check each employee’s Borang E to ensure that everything is in place.
3. Once that is done, click on “Download Form E“, sign and submit via E-Filing. 

Too good to be true? Check out our 1-min video demo to believe it:

Alternatively, you can also check out our Knowledge Center article on how easy it is to generate, fill and print Borang E in Talenox.

What do I do after printing out the forms? For next steps, check out our Knowledge Center article guide for step-by-step instructions on how to submit Borang E in the ezHasil portal. 

4. What are the specific details to look out for in Borang E?

Basic Information

In this section, the following are required:

• Name of Employer. This name should be as registered with the Companies Commission of Malaysia (SSM) or others.
  • If there is any change to the employer’s name, simply indicate the former name in parenthesis.
  • What if the employer is not registered with SSM or others? In that case, simply fill in the name as per identity card or passport.
• Employer’s Number. An employer’s file number is required. E.g. E12345678.
• Status of Employer. With reference to the table below, you should indicate the Status Code as ‘4’ if the employer fronts a private company.

• Status of Business. If a company has never commenced operations since the date it was incorporated or established, the status of business is considered ‘Dormant’. A business is also considered ‘Dormat’ if it had previously been in operation or business but has now ceased these activities.

• Income Tax Number. The first two numbers would be the File Type Code, while the subsequent string of 11 numbers are the Income tax Number. You can ascertain each employee’s File Type Code by referring to the table below.

• Identification Number and Passport Number. These details have to be indicated by the precedent partner or sole proprietor of the business, if any.
• Registration Number with SSM or Others. This is the number as registered with the Companies Commission of Malaysia (SSM) or others.
• Correspondence Address, Telephone Number, Handphone Number and Email. These contact details will be used for any correspondence with LHDN, so do ensure that they are correct.
• Return of C.P.8D. This is where you enter the relevant code for the method of submission in the box provided.

Information on the Number of Employees for YA 2020

Return of Remuneration from Employment, Claim for Deduction and Particulars of Tax Deduction for YA 2020

Qualifying Child Relief

M. List of Tax-Exempt Allowances/ Perquisites/Gifts/Benefits

Total Claim for Employee via Form TP1

Total Tax Deduction