As it is often said, knowledge is power. In 2012, we will be issuing regular newsletters to inform you of relevant tax issues and updates. With ever changing legislation and guidelines, it is important to keep up to date with the latest compliance issues and updates.
In this issue, we highlight the key information on the change in EPF rate. It is highly important to read this as it will impact your January payroll and bonuses.
If you have any queries with regard to any of the information in the newsletter, please do not hesitate to contact us.
Please look out for our next newsletter.
Change in Employer’s EPF contribution rate – effective January 2012
The new employer’s share contribution rate for employees with monthly wage/salary of RM5,000.00 and below will be effective from January 2012 wage/salary (February 2012 contribution) onwards.
The two categories of employees affected with the change are as follows:
- Employees aged less than 55 years
The new employer’s share contribution rate is 13% (increase of 1%); subject to the wage/salary in Part A, Third Schedule, EPF Act 1991.
- Employees aged 55 years and above, up to 75 years
The new employer’s share contribution rate is 6.5% (increase of 0.5%); subject to the wage/salary in Part C, Third Schedule, EPF Act 1991.
Effect of bonus to determine whether to pay 12% or 13%
If the employer pays bonus to an employee who receives monthly wages of RM5,000.00 and below and upon receiving the said bonus renders the wages received for that month to exceed RM5,000.00, the calculation of the employer contribution rate shall be calculated at the rate of 13%, and the total contribution which includes cents shall be rounded to the next ringgit.
Example 1:
An employee of not more than 55 years old who receives monthly wage/salary of RM3,000.00 and bonus payment of RM6,000.00 with a total of RM9,000.00, the employer’s share contribution rate for the employee is 13% (i.e. RM 1,170).
Example 2:
An employee of 55 years old and above (up to 75 years old) who receives monthly wage/salary of RM4,000.00 and bonus payment of RM8,000.00 with a total of RM12,000.00, the employer’s share contribution rate for the employee is 6.5%. (i.e. RM 780).
Please refer to KWSP’s website http://www.kwsp.gov.my for further information.
Latest EPF schedule: http://www.kwsp.gov.my/index.php?hdl=bin&rp=1340
FAQs: http://www.kwsp.gov.my/index.php?hdl=bin&rp=1342