Filing Form E and CP8D is a crucial task for employers in Malaysia. However, many make mistakes that can lead to penalties or delays. Understanding these common errors can help businesses:
- stay compliant and
- avoid unnecessary issues.
In this article, we’ll highlight the most frequent mistakes employers make and provide tips on how to avoid them. By following these guidelines, employers can ensure smoother and more accurate submissions.
What Are Form E and CP8D, and Why Are They Important?
Form E and CP8D are key forms for reporting:
- employee income and
- tax details.
You need to file Borang E with the Lembaga Hasil Dalam Negeri (LHDN), or the Inland Revenue Board, to declare:
- employee remuneration and
- details of non-resident individuals.
Both forms require accurate employee information, including:
- identity cards,
- salary arrears, and
- income tax file numbers.
If you have a dormant company, you might think you’re exempt. But Borang E still applies. This often catches people off guard. Failing to submit Borang E, even for dormant or non-performing company, can lead to penalties. You should include details of employees such as:
- income,
- deductions from remuneration, and
- childcare benefits.
The LHDN MyTax Portal allows you to submit Form E online. In cases involving foreign employees or a public company, the reporting requirements differ. You’ll need to provide extra documentation such as:
- work permits and
- the basis of travel.
Don’t forget to check if any employees are eligible for tax relief. Even small errors like:
- incorrect tax brackets or
- missing employee details
can cause delays. To avoid such issues, always double-check each employee’s Borang E before filing.
Steps on how to submit Form E Submitting Borang E is an important task.
You need to log into the LHDN MyTax Portal, the Inland Revenue Board’s online portal. This is where you complete the Form E submission. You can choose to file using the online form or e-filing. Before you submit, gather relevant documents like:
- identity cards,
- employee income files, and
- employer declarations.
Once completed, submit the form through the LHDN MyTax Portal. Submitting late can result in penalties, and this applies to all companies, including:
- Sdn Bhd,
- public companies
- SoleProprietor B businesses must comply.
How Do Employers Misunderstand Reporting g Deadlines?
Many employers misunderstand Form E deadlines because they assume that only active companies need to file. Even a dormant company must submit Borang E to the Lembaga Hasil Dalam Negeri.
Some think payroll processing delays allow for deadline extensions, but this is not the case. The Inland Revenue Board is strict about submission dates, whether you’re filing through an online portal or using manual filing.
A common mistake is mixing up deadlines for employee income tax files and the employer declaration. You might file your employee details and think you’re done, but the Form E submission has a separate deadline.
Type of business responsible for timely submission :
- Companies,
- Every employer, even
- a Sole-Proprietor B
What Happens If You File Incomplete CP8D Forms?
Filing incomplete CP8D forms can lead to serious issues with the Lembaga Hasil Dalam Negeri (LHDN). If your form is missing crucial details like:
- employee earnings,
- deductions from employee remuneration, or
- identity card information for non-resident individuals,
the Inland Revenue Board may reject your submission. This delays your Form E submission and risks penalties. You could face fines for incomplete or inaccurate information, especially if the count of employees or employee income declaration report is incorrect.
Employers who use SQL Payroll Software may assume the automated system will catch errors. But without double-checking employee details or ensuring the correct employee headcount, mistakes still happen.
Missing information like:
- salary arrears or
- child relief
can lead to discrepancies. If your payroll processing includes foreign employees or those on the basis of travel, failing to account for their:
- tax relief or
- Employee Insurance System contributions
will lead to incomplete forms. Even if you submit via the LHDN MyTax Portal, make sure the online form is complete. Many companies, especially Sdn Bhd or public companies, forget to include relevant documents like purchase receipts or registration documents.
Dormant companies also need to file complete forms, even without active employee remuneration. Sending in an incomplete income tax file results in the Inland Revenue Board requesting additional documents, leading to more delays.
You must ensure every employee file is accurate and double-check every submission receipt to avoid amateur mistakes.
How Can Late Filing of Form E Lead to Penalties?
Late filing of Form E can lead to hefty penalties imposed by the Lembaga Hasil Dalam Negeri (LHDN). If you miss the deadline for Form E submission, expect fines ranging from RM200 to RM20,000, depending on how long the delay is.
Companies, especially Sdn Bhd or dormant companies, that fail to submit the form on time are often unaware of these steep fines until they receive a letter from the Inland Revenue Board. Common mistakes include:
- not completing the employer declaration or
- missing key information about employee earnings and
- employee deductions.
SQL Payroll Software can help with payroll processing, but if you don’t double-check your submission, even automated payroll systems can fail to catch errors.
The LHDN MyTax Portal allows you to fill out the form online, but many employers still get tripped up when submitting relevant documents or details of non-resident individuals. Filing late also leads to issues with your income tax file.
When details like the remuneration of employees or salary arrears are incomplete or inaccurate, the Inland Revenue Board may require you to submit additional reports or documentation.
Avoiding mistakes when filing Form E and CP8D is important.
Avoiding mistakes when filing Form E and CP8D is key to staying compliant with tax regulations. By understanding common errors:
- employers can save time,
- reduce stress, and
- avoid penalties.
Taking the time to review submissions and keeping accurate records can make a big difference. With proper attention to detail, employers can ensure a smooth filing process and meet their obligations successfully.