Essential Payroll Compliance in Malaysia and its Possible Complications
How do employers ensure that the payroll compliance is applied appropriately according to the local requirements?
Previously, we discussed on the 4 Key Things You Must Know about Payroll Operations in Malaysia. Now let’s take a look into the Common Payroll Compliance in Malaysia and its Related Challenges.
The key to payroll compliance is to first comply with mandatory employment requirements. Payroll errors can cause problems to the company and its employees.
These are some of the most prevailing causes of payroll challenges that would lead to incompliance issues that employers should take note of.
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Inaccurate employees’ data and record
It is critical that your company’s HR department solicits important and accurate data and records on the first day when a new employee joins the company. Beyond the personal particulars, it is important to ensure that new employees report the correct and accurate employment and payroll related records. Any wrong information can result in wrong payroll calculation and tax reporting. It is recommended to carry out a yearly refresh exercise to ensure the hygiene of your employees’ records.
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Critical payroll errors related to statutory boards
The penalties can be avoided with the mandatory statutory bodies. Ensure contribution rates are applied correctly; tally payroll reports with the overall contributions; and make sure contribution month and payment month are aligned. Inaccurate contributions will be compounded over the months and will pose many difficulties in rectifying the errors.
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Unreported benefits-in-kind, perquisites and compensation
Other benefits paid out to the employees are to be included in overall compensation even though they are not paid via payroll. A comprehensive compensation reporting is important as it will ultimately affect the overall tax applications for both the employer and the employees.
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Not adhering to the latest regulatory changes
It is imperative to keep up-to-date on the most recent regulatory changes that concern and impact the payroll of your employees. Accumulative tabulation of wrong info as a result of the unmet changes can be cumbersome to unravel.
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