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Changes in Malaysian EPF Contribution Rates: Effective January 2018

An inevitable part of employing staff abroad is anticipating changes to host country employment, payroll and immigration laws.  One example of this is the recent change to the Employee Provident Fund (EPF) contribution rate in Malaysia, affecting our clients with staff on assignment.  Our local partner was able to inform us in advance about the changes so that we could advise our clients of the pending adjustments.

What are the EPF changes?

The EPF (Employees Provident Fund) is a fund for employee retirement benefits, with contributions from both the employer and employee.  Contributions are required by any worker in Malaysia, including expats who are residents.

The key change is that the employee monthly contribution rate was increased from 8% to 11% of monthly gross salary for employees under 60 years of age.  The rate change for employees over 60 is now 5.5% from the previous rate of 4%.  This change must be reflected when calculating payroll for all eligible employees.  The employer contribution rate remains the same at 12%.

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When is the EPF Change Effective?

The changes are effective from January 2018 onward for all contributions.

Who Does it Impact?

All Malaysian employees are affected by the change, as well as resident expat workers.  Non-resident expats who have opted to contribute will also pay the new rate.

Shield GEO Solution

The EPF change is an instance where our clients with staff in Malaysia were informed well ahead of time by our in-country experts and local partners.  This allowed them to adjust their payroll contributions and maintain compliance with Malaysian laws.

Countries are constantly changing their employment and payroll regulations, and Shield GEO provides up to date information and advice to our clients about pending changes and impact on assigned staff.  We make international employment simple in over 90 different countries, with expertise in employment, payroll and immigration rules.

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