Workforce Payments Guide Malaysia

Last updated: Dec 24, 2023

Currency
Malaysian Ringgit (MYR)
Payroll Frequency
Monthly
Capital
Kuala Lumpur
Fiscal Year
1 January - 31 December
Employer Taxes
18.95%-22.45%
Employee Costs
17.20%
Central Bank
Bank of England
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3rd Party Payments

Authority  Payment Frequency  Due Date  Payment Method 
Corporate Income Tax (CIT)  Quarterly  15 June, 15 September, 15 December, 15 March  Digital 
Withholding Tax  Various  Within 30 days after paying or crediting  Digital 
Sales and Service Tax (SST)  Monthly  Last day of the month following the end of taxable period  Digital 

Payments Coverage

Papaya Global fully supports payroll payments in Malaysia.

Contractor Payments

Papaya Global supports payments to contractors in Malaysia. The payout currency may vary based on the receiver bank account setup when receiving foreign currencies. it is advised for contractors to reach out to their bank to confirm how foreign currencies are handled

Payroll Frequency

Monthly

KYC

In Malaysia, the Know Your Customer (KYC) process is facilitated through an electronic system known as e-KYC. The Central Bank of Malaysia (BNM) has issued guidelines for e-KYC, which is a mandatory practice for businesses to verify the identities and suitability of their customers.

The process involves the digitalization of identification and verification services, requiring financial institutions to adopt an appropriate combination of authentication factors. These factors include information the customer possesses (like an identity card or registered mobile number), information the customer knows (like a PIN or personal information), and information the customer is (like biometric characteristics).

The use of artificial intelligence (AI), machine learning, and biometrics is encouraged, with systems such as facial recognition, optical character recognition (OCR), and fraud detection solutions being utilized. e-KYC also allows for remote digital onboarding of customers, which opens up greater market opportunities for the banking and financial services sector.

This process is regulated by both the Personal Data Protection Act 2010 (PDPA) and the Anti-Money Laundering, Anti-Terrorism Financing and Proceeds of Unlawful Activities Act 2001 (AMLA), and is used to assess the possible illegal intentions of customers and reduce cases of money laundering and terrorism financing.

Banking Regulations

Banking regulations that impact cross-border workforce payments in Malaysia include:

  • The “Real-Time Electronic Transfer of Funds and Securities Settlement” (RENTAS) system, which also includes its modernisation efforts such as reviewing access for non-bank payment service providers and exploring potential central bank digital currencies (CBDCs) and distributed ledger technology (DLT) applications.
  • Efforts to enhance the efficiency of cross-border payments through initiatives like linking with other real-time payment systems in the ASEAN region and globally as part of the Project Nexus led by the Bank for International Settlements (BIS).
  • The use of multi-CBDC arrangements to facilitate faster and cheaper cross-border payments. This includes projects like Project Dunbar where Malaysia is testing the use of CBDCs alongside Singapore, Australia, and South Africa.
  • The push for an open data agenda to promote financial inclusion, support consumers to make better informed financial decisions, and facilitate fair and reciprocal data-sharing initiatives.
  • The implementation of the digital banking framework to cater for SMEs and the unbanked, and manage systemic risks arising from digital banks.
  • Advancements in regulations for payment service operators like Paynet, Visa, and Mastercard and reviewing existing payment regulations including the e-Payment Incentive Fund Framework (ePIF), Payment Card Reform Framework (PCRF), and the Interoperable Credit Transfer Framework (ICTF).

Opening a Bank Account

To open a company bank account in Malaysia, the following requirements must be met:

  • All directors and authorized persons must be physically present at the bank at the time of opening the corporate account.
  • These persons must not have been declared bankrupt or been blacklisted by Bank Negara.
  • Some banks may require a visit to the company’s physical office before they can process the bank account opening application.
  • Adherence to stringent regulations and laws by the AMLA to safeguard against potential issues like money laundering, terrorist financing and other illegal kinds of businesses.
  • Standard account-opening forms signed by the authorized signatories.
  • Certified true copy by the Company Secretary of the following documents: A resolution by the board of directors approving the opening of corporate bank account(s), Super Form, Constitution, Notice of Registration.
  • Copies of passports or NRIC and proofs of residential addresses for directors, authorised signatories, and ultimate beneficial owners.
  • Copy of Certificate of Incumbency of the holding company (applicable for corporate shareholder only).
  • In case of foreigners, they may be required to have a valid business/working visa/permit.
  • Personal ID / NRIC for local business owners.
  • Documents furnished by the Company Secretary after the Company is successfully incorporated.
  • Business plan.
  • Proof of residential address.
  • Tenancy agreement of business address (if applicable).
  • Company documents (Certificate of incorporation “Borang 9”, register of directors “Form 49” and register of shareholders “Form 24”).
  • Beneficial shareholder personal documents (i.e., proof of wealth, passport, and proof of address).
  • Directors’ documents (passport and proof of address).
  • Other company documents such as recent contracts, main customers and suppliers, and financial statements of the company (if any).

The estimated processing time to open a company bank account in Malaysia varies. It can take between a few weeks to three months depending on the amount of investigation that a bank carries out to confirm the identity and/or creditworthiness of the directors, secretary and the company.

The processing time can be longer for applications without being physically present in Malaysia. The timeline can be approximately 4 to 9 weeks depending on the principal activity of the company and shareholder profile.

International Banks

Some of the major foreign banks operating in Malaysia include:

  • BNP Paribas Malaysia
  • Bangkok Bank Berhad
  • Bank of America Malaysia
  • Bank of China (Malaysia)
  • China Construction Bank (Malaysia)
  • Citibank Berhad
  • Deutsche Bank (Malaysia)
  • HSBC Bank Malaysia Berhad
  • India International Bank (Malaysia)
  • Industrial and Commercial Bank of China (Malaysia)
  • J.P. Morgan Chase Bank
  • MUFG Bank (Malaysia)
  • Mizuho Bank (Malaysia)
  • OCBC Bank (Malaysia)
  • Standard Chartered Bank Malaysia
  • Sumitomo Mitsui Banking Corporation Malaysia
  • United Overseas Bank (Malaysia)
  • The Bank of Nova Scotia Berhad

Major Local Banks

The major local banks operating in Malaysia are:

  • Maybank
  • CIMB
  • Public Bank
  • RHB
  • Hong Leong
  • AmBank
  • Affin Bank
  • Alliance Financial Group Berhad (which includes Alliance Islamic Bank, Alliance Investment Bank and Alliance Bank Malaysia)
  • Bank Rakyat
  • Bank Negara Malaysia

Payment Tools

The B2C payment tools available in Malaysia are:

  • iPay88
  • Razer Merchant Services (RMS) – formerly known as MOLPay
  • senangPay
  • Billplz
  • Paypal
  • Stripe
  • Payhalal
  • eGHL (GHL Systems Berhad)
  • Boost eWallet App
  • GrabPay
  • Touch ‘n Go eWallet
  • Curlec
  • kiplePay
  • 2C2P
  • SwiFPay
  • M2UPay
  • Adyen
  • 2Checkout
  • Braintree
  • PayDollar
  • Wanna
  • AnyPay
  • Bank transfers (dominated by Maybank2u and CIMB Clicks)
  • Cards (credit and debit)
  • Cash

Cryptocurrency

In Malaysia, it is not possible to pay employees with cryptocurrencies as they are not recognized as legal tender or as a payment instrument. They are, however, recognized as securities.

The main regulator for digital asset service providers in the country is the Securities Commission Malaysia (SCM). Despite this, there are tax regulations for crypto transactions. According to the Guidelines On Tax Treatment Of Digital Currency Transactions, cryptocurrency will only be taxed if it is used in business or trading transactions, where the business’s key activities and operations are performed in Malaysia, or if the business has a presence in Malaysia.

Revenue gains arising from the disposal of digital currency are taxable. Gains derived by individuals who trade occasionally may be viewed as capital gains and are not taxable in Malaysia.

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