ABBD3013

FUNDAMENTALS OF CORPORATE
ADMINISTRATION

PREPARED BY:
HISHAM HANAPI

 Agent to provide services in assessing,

administering, collecting and enforcing the payment

of income tax and other taxes that are under IRBMs
jurisdiction.

Main revenue collecting agencies of the Ministry of

Finance.

Established in accordance with the Inland Revenue

Board of Malaysia Act 1995 to give it more

autonomy especially in financial and personnel
management; to improve the quality and
effectiveness of tax administration.

To create, implement effective taxation

management system.

See more info on www.hasil.gov.my

1. To act as agent of the Government and to

provide services in administering,

assessing, collecting and enforcing the law.
2. To advice the Government on matters
relating to taxation.
Personal, company tax, service tax, import

export duty

3. The oversee the taxation activities in

Malaysia.
4. Collection agent.
5. Advises company on taxation matters.
6. Action and control.
Impose penalty

1. To enter into contracts;

2. To utilise all property of the Board, movable

and immovable, in such manner as the Board

may think expedient including the raising of
loans by mortgaging such property;
3. To engage in any activity, either alone or in
conjunction with other organisations or
international agencies, to promote better
understanding of taxation;
4. To provide technical advice or assistance,
including training facilities, to tax authorities
of other countries;

5. To impose fees or charges for services

6.

7.

8.

9.

rendered by the Board;

To grant loans to employees of the Board
for any purpose specifically approved by
the Board;
To provide recreational facilities and
promote recreational activities for, and
activities conducive to, the welfare of
employees of the Board;
To provide training for employees of the
Board and to award scholarships or
otherwise pay for such training; and
To do anything incidental to any of its
powers.

 Any income derived from Malaysia is

subject to Malaysia income tax each year.

Income from sources outside Malaysia is

exempted from tax, e.g. pension and

dividend.

1. Business, trade or profession.

2. Employment.
3. Dividend, interest or discounts.
4. Rents, royalties or premiums.
5. Pensions, annuities or periodical payments.
6. Gains or profits not falling under any of the foregoing

paragraph

7. Income of non-resident in respect of technical advice,

assistance or services rendered in connection with

any technical management or administration of any
scientific, industrial or commercial understanding,
venture, project or scheme.

 Depend on individuals residence status.

Non-resident flat rate of 27% without any

personal deduction.
Income under aforesaid item 7 is taxed at
10% on gross income.
Residence scale rate of 0%-27% on
chargeable income after personal
deductions.
Residence status determined not by
nationality by the length of stay in Malaysia
i.e. 182 days in a year.

Chargeable
Income

Calculations (RM)

Rate %

Tax (RM)

0 2,500

On the First 2,500

2,501 5,000

Next 2,500

25

5,001 10,000

On the First 5,000

Next 5,000

25
150

10,001 20,000

On the First 10,000

Next 10,000

175
300

20,001 35,000

On the First 20,000

Next 15,000

475
1,050

35,001 50,000

On the First 35,000

Next 15,000

12

1,525
1,800

50,001 70,000

On the First 50,000

Next 20,000

19

3,325
3,800

70,001
10,0000

On the First 70,000

Next 30,000

24

7,125
7,200

Exceeding
100,000

On the First 100,000

Next RM

26

14,325
.

 Income Tax Act 1967

Petroleum (Income Tax) Act 1967
Real Property Gains Tax Act 1976
Promotion of Investment Act 1986
Stamp Act 1949
Labuan Offshore Business Activity Tax

Act 1990

 Employment means work or service

performed by an individual to the task at

hand for another person or entity in exchange
for wages or other remuneration.

Employment Law is the law which

regulates the operation of the labour

market in general and the employment
relationship between employers and
employees in particular. Examples
include hiring process, suspension from
work, maternity rights, layoff and
wages.

The obligations and rights of an

employment contract are covered by

the Employment law.

When an offer for employment is made by

an employer to an employee, the law

governing the relationship between an
employee and an employer begins.

An employer in relation to an employee or

a workman, means a person by whom the

employee or workman is employed. An
employer obtains the services of another
to perform work and has direct control of
the way in which the work is to be done.

 Employment Act 1955

Industrial Relation Act 1967
Trade Unions Act 1959
Occupational Safety and Health Act

1994 (OSHA)
Employment Provident Fund Act 1991
Employees' Social Security Act 1969

 Employer - a person by whom the

employee or workman is employed.

An employer obtains the services of
another to perform work and has
direct control of the way in which
the work is to be done.

Employee - a person who has

entered into or works under a

contract of employment.

 Contract of service any agreement,

whether express or implied, and if express,

whether oral or in writing where the
employer agrees to employ and the
employee agrees to be employed and
includes an apprenticeship contract.

Contract for services - no employer and

employee relationship. The person is usually

self-employed or may provide his/her
services on a freelance basis at a fee.

Probation - the time both parties try out the

relationship without long-term commitment.

EMPLOYEES RIGHTS AND

BENEFITS

Employees right to
unionise

Notice to terminate a
contract
Payment of wages
i) Wage periods
ii) Deductions from
wages
iii) Others
Employment of women
i) Women and night
work
ii) Women and
underground work

Working hours and

leave
i) Working hours
ii) Overtime
iii) Rest day
iv) Public holiday
v) Annual leave
vi) Sick leave
Termination benefits
Employment of
foreign employees

 Right to unionise - Employers may not put any

clause in a contract of employment which in

any way restricts the right of an employee to
join a registered trade union, to participate in
the activities of that union or to join with
others for the purposes of forming a union.

Working hours cannot work more than 5

consecutive hours without at least 30 minutes

rest. (sometimes more than 8 hours are
allowed if necessary but he must have at
least 45 minutes rest).

 The employer and the employee to a contract of

service may at any time give to the other notice

of termination of such contract of service.
The length of notice shall be the same for both
employer and employee pursuant to the
contract of employment.
In the absence of the notice the period of notice
under the Employment Act 1955:a) 4 weeks notice - employed for < 2 years
b) 6 weeks notice - employed for 2 years
but < 5 years
c) 8 weeks notice - employed for 5 years

 Overtime - the number of hours of work

carried out in excess of the normal hours of

work per day.

Normal hours of work - the number of hours

work as agreed between the employer and

employee in the contract of service.

Ordinary rate of pay - wages as defined which

an employee is entitled to receive under his

contract of service for the normal hours of
work but does not include overtime payment
on a rest day or a public holiday.

 Contractual Bonus - the amount of bonus

fixed by the employer under a contract of

service irrespective whether the company
makes an annual profit or loss.

Hourly rate of pay - the ordinary rate of pay

divided by the normal hours of work

provided. In the case of an employee
employed at a monthly rate of pay, the
ordinary rate of pay shall be calculated by
the monthly rate of pay divided by 26. A
similar formula is available for those
employed on a daily rate.

 Employees Provident Fund Act 1991 is the act

governing the Employees Provident Fund in

Malaysia. This Act is administered by the
Employees Provident Fund, Malaysia.

Its primary aim is to provide a measure of

security for old age retirement to its

members. It also provides supplementary
benefits to members to utilize part of their
savings for house ownership and other
withdrawal schemes.
See more info on www.kwsp.gov.my

 All employees who has reached 16 and

employed under contract of service must be

registered as a member of the EPF.
Contribution: Employer 12% of the employees
wages;
Employee 11% of the employees wages.

Foreign workers and expatriates earning less

than RM2, 500 per month are also required to

contribute to EPF with the exception of certain
categories.
Exemption - employees or workers holding
Employment Pass or expatriates holding Visit
Pass (Temporary Employment) whose monthly
wages is not less than RM2,500

 Employers must register their employees with

the EPF within 7 days of employment under

law.
An employer who contravenes the above shall
be found guilty of an offence, if convicted:
imprisonment not more than 3 years; or
fine not more than RM10,000 or both.

An employer shall register the company or

firm with the EPF by submitting the KWSP 1

Form. This can be obtained from the nearest
EPF branch office.

 Thereafter, for each employee, the employee

and the employer is required to complete the

KWSP 3 (AHL) Form. Generally, an employee
will also be required to submit the
Nomination Form KWSP 4 (AHL) which is
attached together with the KWSP 3 (AHL)
Form.

Once the application is approved, the

employee will be sent a Membership Card.

The EPF contribution commences on the first

month of salary payment.

 Set up to administer, enforce and

implement Employees' Social Security

Act 1969, Regulation 1971.
Main activity - Protection by social
insurance including:a) Rehabilitation for employees
b) Financial support for family members
c) Explanation on wages
d) Employment Injury Scheme
e) Medical and cash benefits
See more info on www.perkeso.gov.my

 Monthly wage of less than RM 2000 - must

register and contribute to SOCSO.

No age limit.
Coverage Malaysian workers and

permanent residents only. Foreign workers

are protected under Workmen's
Compensation Act 1952.

 Does not cover:

1. Government employees (protected under
2.
3.

4.

5.
6.

Pensions Act 1980).

A person whose wages exceed RM2, 000 a
month and has never been covered before.
Domestic servants employed to work in a
private dwelling house which includes a cook,
gardeners, house servants, watchman, washer
woman and driver.
Employees who have attained the age of 55
only for purposes of invalidity (covered by
Invalidity Pensions Scheme) but if they
continue to work they should be covered under
the Employment Injuries Scheme.
Self-employed persons.
Foreign workers.

 Provides coverage for accidents that occur while:

1. Travelling
2. Arising out of and in the course of employment
3. Occupational diseases.
Provides benefits:
1. Medical Benefit
2. Disablement (temporary and permanent)
3. Constant attendance allowance
4. Rehabilitation benefit
5. Funeral benefit
6. Dependant's benefit
Rates payable - Employer = 1.75% for EIIS and

Invalidity

Pensions Scheme (IPS)

- Employee = 0.5% for IPS

Q & A
Next: HR: Industrial

Relations, Trade Unions,

OSHA.