The Inland Revenue Board of Malaysia has issued a public ruling clarifying the tax status and other aspects of contributions to private retirement plans.
An individual may contribute to a variety of retirement plans offered by one provider or to several separate plans, each operated independently. Investing outside of Malaysia is permitted for growth and moderate funds, but conservative funds are not permitted, and other rules restrict the types of investments that each fund may make.
Generally, employers may deduct contributions they make on behalf of their employees, but only up to 19% of their salaries.
When contributions are made for employees who are subject to vesting schedules, the contributions can only be paid to the workers when the vesting period stipulated in the vesting agreement has been reached; if the worker leaves his or her job before the set vesting time, the employer may retake the money paid into the plan for that worker. The amount retrieved from the retirement plan’s funds, however, is considered part of the gross income of the employer.
Regarding the tax treatment of individuals with private retirement plans, the ruling made the following points:
According to the Income Tax Act, private retirement plans do not have to pay taxes on income received.
Let us assist you in registering your Malaysian business
