Part A: New Tax Rates (YA 2023)
Significant updates have been made to the Monthly Tax Deduction (PCB) rates, which are expected to impact both draft and future payrolls for 2023 within BrioHR.
To view the updated tax rates for Assessment Year 2023, please visit the LHDN website here.
Here are some general guidelines to help you prepare for these changes:
If the Total Annual Income is:
- RM 48,000 & below: You may not notice any change in PCB deductions.
- RM 48,000 - RM 400,000 & below: You may see a decrease in PCB deductions.
- RM 400,000 & above: You may see an increase in PCB deductions.
NOTE:
The above information assumes the employee is unmarried and has no dependent children. Tax implications may differ for employees based on their marital status and whether they have dependents. Married employees and those with dependents will have a lower taxable income, resulting in lower PCB deductions.
Due to the PCB amounts previously deducted in the early months of the year, two scenarios may arise:
- Employees with decreased PCB deductions may have even lower PCB than before, having already paid a higher amount earlier in the year.
- Employees with increased PCB deductions may face even higher PCB than before, having paid a lower amount earlier in the year.
What to Expect When Running Payroll for 2023
Below are examples illustrating how the new tax rates might affect your payroll.
NOTE:
The examples compare PCB deductions for 2022 versus 2023 with the new tax rates.
Example 1:
Monthly Salary: RM 4,000
Total Annual Income: RM 48,000
PCB for YA 2022: RM 200/12 months = RM 16.70 (rounded to the nearest 5 cents)
PCB for YA 2023: RM 200/12 months = RM 16.70 (rounded to the nearest 5 cents)
Example 2:
Monthly Salary: RM 5,000
Total Annual Income: RM 60,000
PCB for YA 2022: RM 1,560/12 months = RM 130.00
PCB for YA 2023: RM 1,320/12 months = RM 110.00
Example 3:
Monthly Salary: RM 40,000
Total Annual Income: RM 480,000
PCB for YA 2022: RM 100,200/12 months = RM 8,350.00
PCB for YA 2023: RM 100,820/12 months = RM 8,485.00
NOTE:
To verify PCB deduction amounts, you can cross-check using the LHDN PCB Calculator here.
NOTE:
When processing a draft payroll or reopening payrolls for 2023 in Malaysia, you may see a banner stating "refresh due to tax changes" as shown in the sample screenshot below:
NOTE:
If you choose to refresh the data, the payroll will be updated to reflect the most recent Malaysia tax rates and reliefs. This update will also affect employees with changes in data or payroll settings.
To refresh the payroll, click "Refresh All," then click the "Confirm" button to complete the action. If you prefer to keep your current payroll calculations without applying the new tax table updates, click "Cancel."
Part B: Changes to Tax Relief (YA 2023)
The Malaysian government has recently implemented changes to tax relief policies.
One significant update is the increase in the maximum tax relief for Medical Treatment Expenses from RM 8,000 to RM 10,000.
Additionally, two tax relief items have been removed:
- Domestic Tourism Expenditure:
Previously, taxpayers could claim up to RM 1,000 for such expenses. - Lifestyle Expenses (purchases of computers, smartphones, or tablets for personal use):
Previously, taxpayers could claim up to RM 2,500.
Please refer to the updated tax reliefs in the following forms:
a. TP1 (Section C): BORANG PCB/TP1 (1/2023)
b. TP3 (Section D): BORANG PCB/TP3 (1/2023)
NOTE:
If an employee has already claimed the removed tax reliefs via the TP3 form or TP1 in payroll, they will see a slight increase in their PCB to account for the removal of those reliefs.
Need Assistance?
If you have any questions or require assistance, please reach out to our support team via live chat or email us at support@briohr.com.