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Phone, internet, coworking, and software subscriptions can be reimbursed tax-free when properly documented. For these subscriptions, a tax invoice or receipt must show the date, amount, service provider or merchant name, and a description of the purchase or service; for tax invoices, the employee’s name must also appear.
Employment in Malaysia
Minimum wage
MYR 20,400
Employer costs
13.7–15%
Employee contribution
11.25–11.7%
Employee tax
1–30%
In Malaysia, the statutory minimum wage is 20,400 MYR per year. Typical employer social contributions range from 13.7–15%, while employee social contributions usually fall between 11.25–11.7%. Personal income tax is progressive, with headline rates from 1–30%. When budgeting for hires, factor in both employer and employee contributions to schemes such as EPF, SOCSO, and EIS in addition to salary and tax.
Onboarding time
We can help you get a new employee started in Malaysia fast. The minimum onboarding time we need is only 48 hours. Our team ensures fast, compliant employee onboarding and payroll processing. The onboarding timeline starts once the employee submits all required information via the NEO platform.
Payroll
In Malaysia, both employers and employees contribute to statutory schemes such as EPF, SOCSO, and EIS, with employers also potentially paying the HRDF levy. Typical total employer contributions range from 13.7–15% of salary, while employee contributions usually fall between 11.25–11.7%, depending on the specific statutory component and employee profile.
Minimum wages
Statutory minimum wage (annual)
20,400 MYR
Working hours
Standard full-time work in Malaysia is typically organized over a five-day workweek from Monday to Friday. The usual schedule is based on 40 working hours per week, with specific daily hours set in the employment contract or company policy.
Leave
Malaysian employment arrangements commonly distinguish between general paid time off and sick leave, each with its own annual entitlement. Unused days under these policies do not carry over to the next year.
Leave entitlements
| Leave type | Annual days | Carry-over |
|---|---|---|
| Paid time off | 8 | No carry-over of unused days |
| Sick leave | 14 | No carry-over of unused days |
Public holidays
Malaysia observes a mix of religious and national public holidays. The list below shows key nationwide holidays for 2026 that employers should plan around when scheduling work and leave.
Public holidays 2026
| Date | Holiday |
|---|---|
| 2026-02-17 | Chinese New Year |
| 2026-02-18 | Chinese New Year (Second Day) |
| 2026-03-20 | Eid al-Fitr |
| 2026-03-21 | Eid al-Fitr (Second Day) |
| 2026-05-01 | Vesak Day |
| 2026-05-01 | Labor Day |
| 2026-05-27 | Eid al-Adha |
| 2026-06-01 | Birthday of HM Yang di-Pertuan Agong |
| 2026-06-16 | Islamic New Year |
| 2026-08-25 | Prophet Muhammad's Birthday |
| 2026-08-31 | National Day |
| 2026-09-16 | Malaysia Day |
| 2026-12-25 | Christmas Day |
Expenses
Employees in Malaysia must respect strict submission deadlines. Current-year expenses must be submitted within 60 days of the expense date or within 30 days after returning from a business trip, whichever is later, and prior-year expenses are not accepted after February 1 of the following year.
Submission deadlines
| Expense Type | Action and deadline |
|---|---|
| Current year's expenses | Submit within 60 days of expense date or 30 days after return from business travel (whichever is later) |
| Prior year's expenses | Submit by February 1 of the following year |
Bank statements and transaction details are not accepted as primary documentation in Malaysia. Every claim must be supported by a valid receipt or tax invoice, and missing documentation can cause the expense to be treated as taxable.
Communication and workspace
- Phone subscription – Non taxable with valid tax invoice or receipt
- Internet subscription – Non taxable with valid tax invoice or receipt
- Coworking – Non taxable with valid tax invoice or receipt
- Software subscription – Non taxable with valid tax invoice or receipt
Equipment and supplies
Laptops, office equipment, and office supplies are reimbursed on a non-taxable basis when supported by a tax invoice or receipt showing the date, amount, service provider or merchant name, and description of the purchase or service, and for tax invoices, the employee’s name. Postal charges are also non-taxable with a tax invoice or receipt that shows the date, amount, provider, and description.
- Laptop – Non taxable with valid documentation
- Office equipment – Non taxable with valid documentation
- Office supplies – Non taxable with valid documentation
- Postal charges – Non taxable with valid documentation
Travel
Most business travel costs are non-taxable when backed by appropriate documents such as tax invoices, receipts, tickets, booking confirmations, or statements that show the date, amount, service provider or merchant name, and a clear description of the service; for many tax invoices, the employee’s name must also appear. Fuel, toll payments, and travel allowances (including per diems) are non-taxable only up to a combined annual limit of MYR 6,000, with any excess treated as taxable and subject to withholding.
- Business travel insurance – Non taxable with tax invoice or receipt
- Visa fee – Non taxable with tax invoice, receipt, or Thailand border fee document
- Accommodation – Non taxable with tax invoice, receipt, or hotel booking confirmation with payment
- Flight – Non taxable with tax invoice, receipt, or flight booking confirmation including payment summary and traveler details
- Taxi or rideshare – Non taxable with tax invoice, receipt, or Grab Taxi statement
- Train – Non taxable with tax invoice, receipt, tickets or booking confirmations, or relevant transport statements
- Public transport – Non taxable if business purpose is mentioned and supported by tickets, receipts, or statements
- Car rental – Non taxable with tax invoice, receipt, rental agreement, or booking confirmation
- Fuel – Non taxable within the MYR 6,000 annual limit for fuel, tolls, and travel allowances, with tax invoice or receipt
- Mileage – Non taxable with a mileage log including date, employee name, origin and destination, business purpose, distance in km, and rate applied
- Parking or toll fees – Non taxable within the MYR 6,000 annual limit for fuel, tolls, and travel allowances, with tax invoice, receipt, or Touch N Go statement
Meals and entertainment
Everyday meals, groceries, and client or partner meals can be reimbursed on a non-taxable basis when supported by a tax invoice or receipt. The document must show the date, amount, and service provider or merchant name, and for groceries, it must also describe the purchase or service and, on tax invoices, include the employee’s name.
- Breakfast, lunch and dinner – Non taxable with tax invoice or receipt
- Groceries – Non taxable with detailed tax invoice or receipt including employee name on tax invoice
- Meal with client or partner – Non taxable with tax invoice or receipt
Other expenses
A wide range of other business-related costs, including program or project expenses, training and courses, books, promotional items, gifts, laundry, and insurance and medical costs, are non-taxable when properly documented. Claims must be supported by a tax invoice or receipt showing the date, amount, service provider or merchant name, and description of the purchase or service, and for some items, the employee’s name on the tax invoice.
- Program or project claims – Non taxable with valid documentation
- Training, courses, and books – Non taxable with valid documentation including employee name on tax invoice
- Promotional items – Non taxable with valid documentation including employee name on tax invoice
- Gifts – Non taxable with valid documentation including employee name on tax invoice
- Laundry claims – Non taxable with valid documentation
- Medical insurance – Non taxable with valid documentation
- Medical cost (including dental and medical claims) – Non taxable with valid documentation
- Life insurance – Non taxable with valid documentation
Business travel per diem
Malaysia does not have a standard per diem rate; per diem payments are treated as travel allowances rather than standard expense reimbursements. Travel allowances, including per diems, are non-taxable up to MYR 6,000 per year for official business travel, and any amount above this annual threshold is taxable and subject to payroll withholding, so clients should keep records of the approved rates for audit purposes.
Per diem tax treatment
| Per diem amount | Tax treatment | Withholding |
|---|---|---|
| Up to MYR 6,000 per year | Non taxable | No |
| Exceeding MYR 6,000 per year | Taxable | Yes (PCB) |
Mileage
There is no standard mileage reimbursement rate in Malaysia. Mileage claims are non-taxable when supported by a mileage log that includes the date of travel, full employee name, origin and destination, business purpose, distance in kilometers, and the rate applied; this information can be provided in the claim description field.
Allowances
In Malaysia, allowances are one-time or recurring benefits that should be clearly described in the offer of employment or added later by amendment. Most allowances are treated as taxable income, and employers can choose which employees receive them and at what level.
The allowances below are all discretionary, may be offered to one or more employees at the employer’s discretion, and are treated as taxable. Where documentation is required, employees generally submit invoices or receipts and claims are processed manually.
| Type | Status | Taxation | Limitations |
|---|---|---|---|
| Work From Home Allowance | Optional | Taxable | Invoice or receipt required; submitted manually |
| Gym Membership | Optional | Taxable | Invoice or receipt required; submitted manually |
| Wellness | Optional | Taxable | Invoice or receipt required; submitted manually |
| Relocation | Optional | Taxable | Invoice or receipt required; submitted manually |
| Utilities | Optional | Taxable | No documentation required; submitted manually |
Termination
Malaysian employment contracts typically specify both a probation period and a notice period for termination. Employers should ensure these terms are clearly documented from the outset of employment.
Termination-related periods
| Policy | Standard duration |
|---|---|
| Notice period after probation | 30 days minimum |
| Notice period during probation | 28 days minimum |
| Probation period | Up to 180 days |
