Monthly Tax Deduction

Employer's responsibilities under the Monthly Tax Deduction (MTD) Rules are as follows:

a. Deduct the MTD from the remuneration of employee in each month or the relevant month in accordance with the Schedule of Monthly Tax Deductions or Computerised Calculation Method and pay to the Director General.

b. Make additional deductions from employee's remuneration in accordance with the direction given by the Director General under Rule 4 of MTD Rules.

c. Employer shall pay to the Director General, not later than the tenth day of every calendar month, the total amount of tax deducted or should have been deducted by him from the remuneration of employees during the preceding calendar month.

d. Furnish a complete and accurate employee‟s information of the following in a return when submitting MTD payments / additional deductions:

  i. income tax reference number;
  ii. name as stated on identity card or passport;
  iii. new and old identity card number/police number/army number or passport number (for foreign employee); and
  iv. MTD / additional deductions amount.

If the employer fails to furnish a complete and accurate information, MTD payment will not be accepted. Resubmission of MTD payment may be compounded if payment is made after the tenth day of the following month.

e. To furnish information on cessation of payment of employees‟ remuneration as required under Rule 13, MTD Rules in a prescribed form.

f. Keep and retain in safe custody sufficient documents for a period of seven years from the end of the calendar year in which the remuneration is deducted in respect of his employee according to the MTD Rules.

g. Inform every employee of his following responsibilities:

  i. to submit a prescribed form to the employer to notify information relating to his employment with previous employer in the current year.

  ii. to submit a prescribed form to the employer if employee wishes to claim deductions and rebates in the relevant month. The deductions and rebate will be effected subject to approval by employer.

  iii. to submit a prescribed form if employee wishes to include benefits in kind (BIK) and value of living accommodation (VOLA) as part of his monthly remuneration in ascertaining the MTD amount subject to approval by employer.

  iv. to keep and retain in safe custody each and every receipt relating to claims of deductions for a period of seven years from the end of that year of assessment under the Act.

  v. to furnish complete and accurate personal information and update any changes of his personal particulars to the employer.

  vi. to furnish correct information in a prescribed form relating to his own chargeability to tax and failure by the employee to do so constitutes an offence under paragraph 113(1)(b) of the Act.

h. Pursuant to section 75A of the Act, directors of controlled companies are responsible for unpaid MTD under the MTD Rules.
 

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