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MY Budget 2025 : Key Tax Measures You Need to Know

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MY Budget 2025 : Key Tax Measures You Need to Know

boardroomsuperadmin

Malaysia’s Budget 2025 aims to reinvigorate the economy through various tax reforms and tax measures impacting both businesses and individuals.

Unveiled by Prime Minister Datuk Seri Anwar Ibrahim on 18 October 2024, Malaysia Budget 2025 represents a crucial turning point for the nation’s economy with a record allocation of RM421 billion.

The theme, ‘Membugar Ekonomi, Menjana Perubahan, Mensejahtera Rakyat’ (Reinvigorating the Economy, Driving Reforms, and Prospering the People), reflects a dual focus in addressing immediate socio-economic challenges and building long-term resilience.

This budget balances economic growth, fiscal prudence and social welfare. It aims to revitalise the economy through key tax reforms and tax measures, addressing post-pandemic recovery, technological advancements, and climate change while improving the welfare of the Rakyat.

Our exclusive Malaysia Budget 2025 Commentary delves into the intricacies of these tax measures, providing valuable insights that will impact both the business and individual landscapes.

✓ Business Tax Reforms and Incentives for Corporate Taxpayers and Businesses

  • Implementation of Global Minimum Tax (GMT)and Accelerated Capital Allowance (ACA) for e-invoicing
  • Introduction of targeted incentives such as Investment Tax Allowance (ITA) for Smart Logistics Complexes (SLCs) and enhanced export incentives for Integrated Circuit (IC) Design Services

✓ Revenue and Fiscal Responsibility for Consumers and Businesses

  • Broadening the Sales and Services Tax (SST) framework and rationalising subsidies

✓ Tax Measures and Reliefs for Individual Taxpayers

  • Balancing the Introduction of new 2% Dividend Tax with extension of tax exemption on Foreign-Sourced Income (FSI)
  • Introduction of targeted tax reliefs for certain individual taxpayers

✓ ESG-Driven Initiatives

  • Introduction of a carbon tax and incentives for carbon capture, utilization and storage (CCUS) projects

As we navigate these changes line with the national aspiration, businesses and individuals must reassess their tax strategies to stay compliant and competitive.

Download our exclusive commentary now to navigate these changes with confidence. If you have any questions, please email our regional tax team at [email protected].

DOWNLOAD MALAYSIA BUDGET 2025 COMMENTARY

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Mastering Payroll in Manufacturing Industry: Advanced Solutions for a Global Workforce

Mastering Payroll in Manufacturing Industry Advanced Solutions for a Global Workforce

Mastering Payroll in Manufacturing Industry: Advanced Solutions for a Global Workforce

boardroomsuperadmin

Navigating the complexities of payroll management in the manufacturing sector presents unique challenges distinct from those in other industries. Diverse roles and large operational scales require an advanced payroll system to comply with varied labour laws, protecting a predominantly blue-collar workforce and addressing multi-country statutory requirements.

In the manufacturing industry, employees tend to work complex shift schedules to meet operational demands. Adjustments to human resources in response to fluctuating business demands and supply chain issues further complicate payroll processing.

Outsourcing payroll to specialists ensures greater accuracy, compliance and efficiency. It allows manufacturing companies to focus on core production activities rather than administration, mitigating the risk of errors and leveraging advanced systems capable of seamlessly handling global payroll requirements.

As the industry evolves amid increasing regulatory and operational demands, sophisticated payroll solutions for the manufacturing industry has become increasingly critical in enhancing business efficiency and compliance.

Adapting Payroll Systems in Manufacturing Sector for Global Compliance and Worker Protection

A payroll system for the manufacturing industry can be more challenging than in other industries due to several factors. Companies in this sector employ a large number of blue-collar workers, and stringent employment laws are in place to protect them. For this reason, it’s necessary to have a payroll system that can navigate the complex terrain of regulations designed to protect workers, who may be vulnerable to exploitation.

The precision required in processing payroll in the manufacturing industry ensures that employees are compensated fairly and accurately, reflecting the actual hours worked and any overtime, which can be significant.

In addition, manufacturing operations often span multiple countries, each with its own set of labour laws and regulations. A multi-country payroll system is essential to ensure compliance and efficiency across all locations.

Ken Wong, Managing Director Asia, Payroll at BoardRoom Group emphasises the importance of having a payroll system that complies with local laws.

“Having a payroll system that complies with the local statutory requirements is critical,” he says.

The payroll system must account for various shift operations, overtime calculations and local holidays. Additionally, manufacturing plants often operate 24 hours a day, 7 days a week, requiring a flexible approach to employee scheduling and payroll management.

“In the manufacturing industry, you have very complex shift patterns,” Ken says. “There are people who work on Saturdays and Sundays, and then people who work shift hours that are different from what a regular employee who works in a technology company or an office environment would experience. You need to roster these employees into different time slots, and it’s not always easy because, depending on the demands of your business, you may have to increase the number of employees in each shift so that you get more productivity out of it.

“Another factor to consider is the high attrition rate in manufacturing. In a month, multiple employees may resign. Most manufacturing companies employ a large percentage of foreigners, and when they leave the business or leave the country, your tax computation is also more complex because you need to compute the withholding tax before the foreigners can leave the country.”

Integrating the payroll into one platform improves operational efficiency and reduces data duplication. By centralising payroll operations, manufacturing companies can better manage their workforce, ensure accurate payment for all employees and significantly reduce the administrative burden associated with multi-regional compliance and payroll processing.

Essentials of a Multi-country Payroll System for Manufacturing Businesses

Essentials of a Multi-country Payroll System for Manufacturing Businesses

In the complex global manufacturing landscape, the payroll system must be linked with existing HR systems to ensure seamless employee data management.

Ken highlights the importance of data accuracy, especially for manufacturing employees whose earnings may fluctuate with the demands of the business.

“For manufacturing employees, their wage fluctuates according to the demand and supply of the business. So every single dollar counts for them, and being able to process the data accurately and on time ensures that what they have worked and the hours they have put in are being paid correctly.”

Real-time data processing is important in a payroll system tailored for the manufacturing sector as it ensures that adjustments, such as overtime and shift changes, are updated instantly, thus preventing delays and errors. It also enables managers to assess employee output and productivity and adjust rosters to ensure production targets are met.

Integrating the payroll and HR systems is also important when it comes to leave.

“When someone is supposed to be rostered to work today and does not show up, the time system will flag this as someone missing from work,” Ken explains. “The payroll system then goes to your leave system to check whether this person is on leave and if it’s medical leave or annual leave. Therefore, this person does not have their pay deducted and is excused for not being at work. So the time and attendance system keeps the whole process humming.”

Why Integrated HR and Payroll Software is Beneficial

Integrating the HR and payroll systems ensures that employee information stored by the HR system from onboarding can be automatically transferred to the payroll system once the employee starts work.

The importance of having an HR system fully integrated with the payroll system is even more critical for large manufacturing companies that maintain physical operations across multiple countries.

“With many of these companies, what I’ve noticed is that they want to make sure all data comes from one source so there’s a source of proof. They want to deal with integrated data, which means no manual entry of information, and it interfaces with our platform. BoardRoom’s all-inone cloud-based HRMS solution, Ignite, allows us to manage payroll for most countries in Asia,” Ken says.

These integrated systems significantly reduce errors and provide essential reporting features that assist in strategic financial management and compliance audits. The payroll system’s ability to scale and adapt flexibly to the changing needs of a global workforce is not merely a convenience but a necessity.

Integrated HR and Payroll Software is Beneficial

Benefits of Outsourcing Payroll in Manufacturing Industry

Manufacturing companies benefit from the expertise of an outsourcing partner like BoardRoom in managing payroll effectively. The advantages of outsourcing payroll include:

  • cost-efficiency
  • compliance expertise
  • enhanced security
  • freeing up resources to concentrate on core operations

BoardRoom is the ideal outsourcing partner because of its extensive experience in handling large headcounts and complex scenarios.

Ken explains, “Outsourcing isn’t just about handling payroll; it’s about leveraging expertise to effectively accommodate the peaks and troughs of business demands.”

Benefits of Outsourcing Payroll in Manufacturing Industry

Transitioning to an Outsourced Payroll Solution in Eight Steps

Opting for an outsourcing partner like BoardRoom not only simplifies payroll management but enhances overall business efficiency by enabling manufacturers to focus more on their primary business goals.

Here’s how BoardRoom can transition your manufacturing company to an outsourced payroll solution:

Initial consultation and scoping

We’ll engage stakeholders in meetings and collect data to create a detailed needs assessment, which will allow us to tailor our payroll service precisely to the manufacturing site’s requirements.

Solution proposal

Craft a custom proposal based on the initial scoping phase, ensuring the solution addresses all specific operational complexities.

System configuration and customisation

The system is adapted to align seamlessly with existing operational processes and meet any unique payroll and compliance requirements.

User acceptance testing (UAT)

The system is rigorously tested to ensure all functionalities meet your specifications, including comprehensive scenario testing.

Parallel run

This critical phase involves running the new system alongside the current one to identify and rectify any discrepancies or errors and ensure accuracy.

Employee training

We’ll ensure all relevant staff are well-trained in using the new system.

Go live

The system officially becomes operational after successful testing and training.

Post-implementation support

Continuous support and feedback mechanisms are established to ensure the system evolves with the company’s needs and any issues are swiftly addressed.

Drive Success with Advanced Payroll Solutions

The complexity of managing payroll in the manufacturing sector requires sophisticated systems. BoardRoom specialises in offering comprehensive outsourcing services that simplify payroll processes, ensure compliance and enhance operational efficiency.

BoardRoom’s deep understanding of the specific challenges in processing payroll for the manufacturing industry means we are adept at handling everything from employee onboarding to multi-country compliance with precision. Best of all, our tailored solutions are designed to meet the distinct needs of each and every client.

For manufacturing companies aiming to enhance their operational efficiency, partnering with BoardRoom offers a clear advantage. Visit BoardRoom payroll services to discover more about how our expert solutions can simplify your payroll needs. Take the first step towards a seamless, efficient payroll solution today.

Contact BoardRoom for more information:

Ken Wong

Ken Wong

Managing Director for Payroll for Asia

E: [email protected]

T: +60 3 7890 4800

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Guide to e-invoicing: A fast track to compliance with Malaysia’s e-invoicing transition

Guide to e-invoicing A fast track to compliance with Malaysia’s e-invoicing transition

Guide to e-invoicing: A fast track to compliance with Malaysia’s e-invoicing transition

boardroomsuperadmin

E-invoicing was announced in Malaysia as the Inland Revenue Board’s (IRB) solution to combating the issue of the shadow economy and revenue leakage. With the first major deadline in August 2024 fast looming, now is the time for businesses to start preparing for the transition.

E-invoicing implementation is significant for all businesses, and major changes may be required for systems, processes and even strategic direction. While the rollout will be phased, implementation is essential, with all businesses expected to comply by 1 July 2025.

What is e-invoicing and how can you maximise the benefits for your business? Our comprehensive guide offers you insight into the requirements, what you need to do to switch over and the benefits it can bring.

How does e-invoicing work?

An e-invoice is a digital representation of a transaction between a supplier and a buyer. Many companies already issue electronic invoices, such as PDF invoices. However, having such electronic invoices does not necessarily mean being compliant with Malaysia’s e-invoicing requirements as set out by the Inland Revenue Board of Malaysia (IRBM). The Malaysia e-invoice requirements go beyond to include specific processes and reporting formats.

E-invoicing works by enabling seller’s accounts receivable to input invoices into their financial system, which then sends them in a structured electronic format directly to the buyer’s system. Upon receipt, the buyer’s e-invoicing system automatically processes and imports the data into their accounts payable system, which streamlines the payment process without the need for manual handling.

Only two formats of e-invoice are acceptable – XML and JSON. Both of these formats are easy for machines to read, which reduces the time it takes for a machine to translate and process the invoice.

E Invoicing Infographic

What is the timeline for implementation?

There are a number of dates that you need to be aware of in the transition. It’s critical to be mindful of the timeline, as e-invoicing implementation can take up to three to four months to complete.

The following table provides a breakdown of the key dates for the e-invoicing implementation rollout based on business turnover.

Annual Revenue of businessesImplementation Date
Businesses with an annual turnover greater than RM 100 million1 August 2024
Businesses with an annual turnover greater than RM 25 million and up to RM 100 million 1 January 2025
All businesses 1 July 2025

The above timeline is subject to changes. Please refer to LDHN website for detailed guidelines and updates.

Exemptions from e-invoicing requirements

Certain types of income expenses do not require an e-invoice.

These include:

  • Employment income
  • Pensions
  • Alimony
  • Dividend distribution by companies listed in Bursa Malaysia, or companies that are not required to deduct tax under Section 108 of the Income Tax Act 1967
  • Zakat

While government bodies, local authorities and statutory bodies are exempt from the e-invoicing requirements, they may voluntarily choose to participate. A complete list of exemptions is detailed in the IRBM’s official e-invoice guidelines.

A step-by-step guide to e-invoicing implementation

A step-by-step guide to e-invoicing implementation

E-invoicing implementation is quite complex. The process may include upgrading infrastructure, integrating systems and training staff to ensure a smooth transition.

Here is a step-by-step guide to help you understand the process and how you can best implement e-invoicing.

1. Confirm business turnover

Your turnover will dictate when you must transition to e-invoicing. Refer to your 2022 audited financial statement or tax return to confirm your business turnover.

If you had a change of accounting year end for financial year 2022, your turnover or revenue will be pro-rated to 12 months. This will be used to determine your implementation date.

2. Conduct a gap assessment analysis

Cheong Woon Chee, Head of Tax Services, BoardRoom Malaysia, says that a gap assessment analysis is a critical next step in the process.

“A gap assessment will help you to determine what you need to do to meet the e-invoicing implementation requirements,” explains Woon Chee. “This should encompass current systems and processes but also the people and the training you’ll need to undertake in preparation for the transition.”

A comprehensive gap assessment should include the following components:

Accounting system compatibility
Evaluate the compatibility of the current accounting system with e-invoicing requirements.
Invoice format compliance
Ensure the invoice format adheres to the required e-invoicing standards.
Self-billing e-invoices
Determine the need for self-billing e-invoices.
Transaction management
Assess how transactions with both B2B and B2C buyers will be managed.
Legal and contractual review
Conduct a thorough review of all legal documents, including contracts and employment agreements.

Once a gap assessment analysis has taken place, a tailored gap closure strategy should be developed that addresses the identified gaps. The strategy should provide detailed recommendations and action plans to ensure a seamless transition to e-invoicing. By understanding the requirements thoroughly, you can plan effectively, working backwards from the implementation date to ensure you are ready on time.

Having this lead time also gives you the opportunity to start talking to your clients, partners and service providers. They are critical in the transition, so it’s important to engage them early to understand their timelines and requirements.

3. Determine the best model for your needs

You have a choice between two e-invoicing models, which will depend on your business needs and size.

The first model uses the MyInvois portal, hosted by the IRB. This portal is available to all taxpayers, and Woon Chee says that if you’re processing around 20 invoices or less a month, MyInvois is a cost-effective solution.

“The other option is an application programming interface (API),” explains Woon Chee. “APIs are more suitable for businesses or taxpayers that process a substantial number of transactions.

“It is likely that your current systems will need enhancements or upgrades to support an API configuration, which comes with an upfront investment.”

Train staff on the new system

4. Train staff on the new system

E-invoicing implementation involves training in the lead up to the transition as well as after the transition to ensure a seamless changeover.

“E-invoicing isn’t like the standard invoices staff are familiar with,” adds Woon Chee. “Initially, training should focus on awareness before moving to additional rounds of training that go into detail about the new process.”

Training is crucial and should cover the strategic approaches the organisation is taking to implement e-invoicing effectively across departments, the tax implications and the compliance requirements. Staff must understand the effects e-invoicing will have on existing accounting processes, especially as the new forms now feature over 50 mandatory fields, raising the chance of errors. Post-implementation training can help identify errors and ensure they are rectified moving forward.

5. Understand the PEPPOL network

The Malaysian e-invoicing requirement is powered by the Pan-European Public Procurement Online (PEPPOL) network. PEPPOL is not a provider. It is an enabler that allows any organisation to send and receive business documents – in this case, e-invoices – through PEPPOL-accredited service providers.

While businesses aren’t required to use a PEPPOL service provider for e-invoicing, there are benefits to doing so. Namely, a PEPPOL-enabled solution ensures effortless compliance and security, seamless integration and error-free automation with real-time insights into your e-invoice progress.

6. Apply for grants and tax incentives

There are grants and tax incentives available to support you with the costs of investing in the infrastructure required to transition to e-invoicing.

These include:

Digital grant
Micro, small, and medium enterprises (MSME) can apply for a grant of up to RM 5,000 (total allocation of RM 100 million) to upgrade digital sales, inventory and accounting systems.
Tax deduction
From YA2024 to YA2027, MSME can receive a tax deduction of up to RM 50,000 for each Year of Assessment (including consultation fees incurred for e-invoicing implementation).
Capital allowance
The capital allowance claim period has been reduced from four years to three years. Capital allowance can be claimed on the purchase of ICT equipment and computer software packages, as well as consultation, licensing and incidental fees related to customised computer software development.

What are the benefits of e-invoicing?

According to the IRB, the benefits of e-invoicing include reducing manual work and associated human error. It will also help streamline operational efficiency, facilitate efficient tax filing, and digitise financial reporting to be in line with industry standards.

The Malaysia Digital Economy Corporate (MDEC) shares similar sentiments around the way e-invoicing will increase business efficiency, improve cash flow and facilitate effective tax reporting.

The BoardRoom team can see a range of benefits for our clients. Eunice Hooi, BoardRoom’s Managing Director Asia, Tax, explains that one of the biggest benefits is the minimisation of inaccuracies thanks to real-time monitoring.

“Shifting to e-invoicing will reduce inaccuracies, as both income and expenses are verified on the spot rather than retrospectively. This immediate validation allows businesses to promptly address any discrepancies identified by the tax authorities, such as disallowed expenses,” says Eunice.

What are the benefits of e-invoicing

The key benefits of implementing e-invoicing include:

  • Seamless compliance through adherence to the e-invoicing mandates, PEPPOL standards and data security.
  • Eliminate errors with automated creation, validation, delivery and archiving of invoices.
  • Smooth integration with existing ERP and business applications, enhancing overall business operations.
  • Gain real-time insights into the status of invoices to ensure timely payments, resulting in visibility and control.
  • Save time and resources by digitising and automating invoicing processes, boosting cost savings and efficiency.

The switch to e-invoicing is not just a system change. It’s a complete mindset shift. A reliable partner will be a critical part of ensuring a seamless transition and maximising your investment.

“We are currently working very closely with some of the API and IT solution providers,” adds Eunice. “Aside from tax services and outsourced accounting services, we can provide our clients with an integrated service, including the IT component with a PEPPOL-Enabled Solution.”

BoardRoom offers a range of services to support you with your e-invoicing implementation. From standalone comprehensive project management service to training workshops or ad hoc consulting, we can tailor a solution to your needs. As your strategic partner, the BoardRoom team will help you to navigate the transition with ease.

“As outsourced accountants and tax experts, we can work with the finance team to advise them on strategically leveraging the e-invoicing data for tax optimisation,” explains Eunice. “For example, we can identify the deductible expenses immediately and ensure we maximise the tax credit and tax deduction without delay.”

Your partner in e-invoicing

With the right experts on your side, you will set your business up with a strategic advantage to leverage the benefits of the e-invoicing requirements. Learn more about BoardRoom’s e-invoice solutions to save you time and money for your e-invoicing transition and beyond. Our expert accounting and tax teams will ensure a smooth and compliant transition, providing you with support every step of the way.

Contact BoardRoom for more information:

Eunice Hooi

Eunice Hooi

Managing Director Asia, Tax

E: [email protected]

T: +60-3-7890 4800

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Employee share option schemes: a boost for Malaysian employers

Employee share option schemes a boost for Malaysian employers

Employee share option schemes: a boost for Malaysian employers

boardroomsuperadmin

In today’s competitive business landscape, attracting and retaining top talent has become a key consideration in Malaysia, particularly for startups. The ability to secure and nurture skilled professionals can significantly enhance a company’s growth trajectory.

This is where an employee share option scheme (ESOS) can help. A type of employee share plan, an ESOS offers an enticing solution that aligns the interests of an employee with the success of their company.

This article delves into the advantages of ESOS, exploring how equity compensation can be a powerful tool for attracting, retaining and engaging top talent in Malaysia.

Understanding employee stock options in Malaysia’s competitive landscape

Malaysian business leaders continue to face the challenge of skills shortages. Despite efforts by the government and private enterprises, many of Malaysia’s employers, particularly those in the technology sector, face difficulty filling vacancies.

Thirty-seven occupations are listed in the latest Critical Occupations List (MyCOL), an annual report commissioned by the Malaysian Government. From managing directors and CEOs to earth-moving operators and truck drivers, the list spans a range of industries where skills shortages are critical.

Given the talent shortages, attracting and retaining top talent is a priority for businesses in Malaysia. Therefore, many are exploring incentives such as employee share option schemes (ESOS) as a way to reward and incentivise employees and engender loyalty.

An ESOS gives employees the option to purchase company shares at a predetermined price, offering a unique opportunity to become shareholders themselves. This connection between employee and company ownership fosters a sense of belonging.

Nora Jasmine Lai, Operations Manager of Employee Plan Services, BoardRoom Group, explains, “The purpose of these programs is to align the company’s goals with employee incentives by allowing the employee to become a part owner of the company and participate in the growth of the business.”

The schemes can be complex and challenging to understand. For example, an ESOS has similarities to an employee share ownership plan (ESOP), though the two vary in terms of the structure, governance, purpose and nature of ownership. However, they broadly aim to achieve the same thing, which is to provide long-term incentives to employees.

Understanding employee stock options in Malaysia’s competitive landscape

Employee benefits in Malaysia: why employers should consider ESOS

Schemes such as ESOS and ESOP provide long-term value for employers by inspiring loyalty among employees. By signing an employee up for the scheme, an employer is essentially saying to them that while they are committed to the growth of the business and contributing to it, they will be rewarded by becoming a shareholder.

As more employees join, the talent within the company grows, strengthening it over time.

Employee turnover costs more than you think

In a competitive landscape, no business leader wants to lose good employees. Experienced employees hold institutional knowledge that can be lost when they leave which can disrupt a business. They are also more likely to have established important relationships with customers and other staff. On the other hand, hiring and training new employees takes time and money. High turnover can destabilise employees, damage a business’s reputation and harm customer relationships.

A report from Employee Benefit News found that it can cost a business more than 30% of the employee’s yearly salary to replace them.

Employee retention comes down to many factors. Employees want to feel valued, engaged and an important part of the team. TINYpulse reports that those workers who feel they have control over their careers are more likely to stay than those who don’t. Employees who are dedicated to their workplace achieve more and are 87% less likely to leave their workplace than those who aren’t. Finally, employees who report they are ‘engaged and thriving’ are much less likely to be searching for other jobs than those who are not.

Employee turnover costs more than you think

How employee share option schemes reduce turnover and benefit employees

There are many benefits of employee share option schemes. They give employees a sense of ownership and their interests become more aligned with other shareholders. Employee engagement also increases as the schemes motivate them to be more productive and focus on overall business success rather than just their day-to-day responsibilities.

It is not just the company that benefits. “The financial gains from an ESOS are defined by the difference between a company’s stock price and the exercise price of the ESOS, which is fixed when ESOS are granted,” Nora says. “Therefore, the higher the stock price, the larger the financial gain. Employees who are granted an ESOS are incentivised and motivated to act in the company’s interest. This, in turn, improves the investor’s perception of the company’s ability to earn and grow its profits in the future, which increases the demand of the company’s shares and therefore, its share price.”

The higher the share price, the larger the financial gain for the employee. Through ESOS, an employee’s financial growth is directly tied to the company’s stock market performance, serving as a strong motivator for employees to contribute to the company’s success.

ESOS in Malaysia: what are the implementation challenges?

There is no doubt that schemes such as ESOSs and ESOPs are valuable tools for employers to attract and retain talent. There are also many benefits to the employee in such a scheme. However, establishing and implementing any type of employee share scheme can be complicated, and the administration and maintenance of such schemes can be onerous for already busy managers and business owners.

“When businesses implement an ESOS, one of the key challenges is helping employees understand how it works,” says Nora. “From the employer’s perspective, managing an ESOS program involves hefty administrative tasks, such as preparing the grant letters, tracking the ESOS data, communicating information to the employees and addressing any questions from time to time.”

The benefits, however, far outweigh the challenges. As we have touched on, setting up and maintaining a scheme can help retain valuable employees, attract top talent and improve productivity. So, how do businesses overcome the challenges and enjoy the benefits of an employee share option scheme?

Administering an employee share option scheme

When establishing a scheme such as an ESOS or ESOP, a company will engage a corporate services provider so they can set up a platform where employees can access useful information on their ESOS holdings.

It is important for businesses to have a platform that effectively implements and maintains the scheme. The platform should enable the employee to easily check on their holdings and guide them on how to transact and update their information. Clear communication about the scheme is also vital so all employees are constantly working towards common goals.

Many businesses choose to outsource the administration of this portal or platform so they can focus on their core objectives. “A good ESOS platform should be easy to understand and easily accessible,” says Nora. “At BoardRoom, we have partners covering end-to-end plan designs, lawyers who are skilled in this area, and administrative services to oversee the schemes on behalf of the company.”

BoardRoom’s comprehensive, user-friendly and secure platform, EmployeeServe, keeps the employees engaged with their company’s employee share scheme.

BoardRoom helps companies design, implement and manage effective ESOS and ESOP programs

How BoardRoom can help

An ESOS is an innovative and compelling way to attract, retain and engage exceptional employees. By linking employees’ success with that of the company, an ESOS helps create a shared goal of growth, prosperity and long-lasting success.

As the business ecosystem in Malaysia continues to evolve, embracing an ESOS could be the key for businesses looking to secure talent and unlock a competitive advantage.

BoardRoom offers tailored solutions to help companies design, implement and manage effective ESOS and ESOP programs. Our software, EmployeeServe, is easy to use and is mobile optimised so that employees can access the portal 24/7 with the latest real-time data on their holdings. The software’s security features also offer peace of mind to employers and employees.

BoardRoom’s team is available to answer questions and offers personalised support to discuss employee share plans such as ESOPs, ESOSs and other employee stock option plans.

Contact our team and discover how we can support your business today.

Related Business Insights

How to navigate transfer pricing in Malaysia: a guide for companies

How to navigate transfer pricing in Malaysia a guide for companies

How to navigate transfer pricing in Malaysia: a guide for companies

boardroomsuperadmin

For companies operating across multiple geographies in Asia, regulatory compliance stands as a strategic cornerstone for companies pursuing successful and sustainable growth. Therefore, keeping up to date with the local regulations in each region you operate is important. This includes learning about the transfer pricing rules as they apply to intercompany transactions.

In this article, we consult Cheong Woon Chee, Head of Tax Services for BoardRoom Malaysia, for an overview of transfer pricing in Malaysia, recent updates to reporting requirements and what businesses can do to ensure strong compliance.

What transfer pricing is

Transfer pricing is the setting of prices for the transfer of goods, services and intellectual property between associated parties.

In Malaysia, associated parties include entities within a multinational enterprise group, such as subsidiary companies and branches.

“These are parties who control one another or are under the common control of another party, either directly or indirectly,” Woon Chee says. Transfers between these entities are referred to as related party transactions.

“Transfer pricing exists because every country has a different tax rate,” Woon Chee explains. “For example, in Malaysia, our corporate tax rate is 24%, but in Singapore it’s 17%. Considering this huge difference, companies can use transfer pricing to save on tax.”

In addition, transfer pricing can support transparent transactions between related parties. However, a potential drawback of this transparency is that it may cause conflict internally.

“If the price is higher or lower than the market price, one of the entities may feel their interests are being sacrificed and deem it unjustifiable,” Woon Chee says.

Transfer Pricing in Malaysia

An overview of transfer pricing guidelines in Malaysia

Transfer pricing is strictly regulated by the Inland Revenue Board of Malaysia (IRBM). Companies must abide by the Malaysian Transfer Pricing Guidelines, which provide detailed standards and rules on how businesses should handle transfer pricing in accordance with Section 140A of the Income Tax Act 1967 and the Transfer Pricing Rules 2023.

The arm’s length principle

Central to these regulations is the arm’s length principle, which dictates that transactions between related entities should be priced as if they were conducted between independent parties.

“Ideally, the transfer price should not be very different from the market price,” Woon Chee says. “So companies must do benchmarking to understand whether the mark-up they apply as part of their transfer pricing is at the median range for their industry.

“If your pricing is too high or low, you will need to justify this when you make the transfer to your related party.”

Transfer pricing documentation

Transfer pricing documentation requirements

Malaysian regulations require taxpayers to prepare and keep transfer pricing documentation if their company:

  • makes over RM 25 million in gross income, and the total amount of related party transactions exceeds RM 15 million; or
  • provides financial assistance exceeding RM 50 million (this does not apply to transactions involving financial institutions).

“This documentation is simply a report to show how the transfer price was determined and justify why these prices are comparable to the price that would be applied to a third party in a similar situation,” Woon Chee says. “It enables the IRBM to ensure that the transactions between related parties were priced at arm’s length.”

The documents must be detailed and contemporaneous, meaning they should be prepared at the same time as transfer pricing policies are developed or implemented.

New transfer pricing rules introduced in May 2023 require companies to complete their contemporaneous documentation before their tax return for the year of assessment is due.

“In Malaysia, the timeline to file your corporate tax return is seven months after you close your financial year end,” Woon Chee says.

Companies that fall below the threshold are held to less scrutiny and can prepare a limited (simplified) version of transfer pricing documentation instead.

The following table shows the different types of information required for detailed and simplified transfer pricing documentation:

Analysis RequiredFull TPDSimplified TPD
Organisation structure
Nature of the business or industry and market conditions
Controlled transaction
Pricing policies
Assumption, strategies and information regarding factors that influence the setting of pricing policies
Comparability, functional and risk analysis
Selection of the transfer pricing metho
Application of the transfer pricing method
Financial information

Why compliance is vital

Taxpayers in Malaysia must supply their transfer pricing documentation upon request by the IRBM. You will only have 14 days to do so. Fail to provide your documents in time, and you may be subject to a fine between RM 20,000 and RM 100,000, or imprisonment of up to six months.

Common compliance challenges

If you are a company with multiple entities in the APAC region and looking to establish a local business in Malaysia, navigating transfer pricing regulations can be challenging. However, prioritising compliance is essential to avoid financial penalisation, potential imprisonment and reputational harm.

Without professional support, businesses often struggle with:

    Understanding their obligations
    Malaysia’s regulatory system is complex and constantly evolving, so it can be difficult to understand which rules and requirements apply to your company throughout its lifecycle.
    Maintaining robust documentation
    Preparing exhaustive transfer pricing documentation can be time-consuming and usually requires at least one month to complete.
    Conducting accurate benchmarking
    Conducting quality benchmarking ahead of transactions is not a simple process. A wealth of accurate, relevant data must be gathered before meaningful comparisons can be drawn.
    Resource constraints
    Many growing businesses lack the resources to establish robust transfer pricing practices and update them regularly.

    According to Woon Chee, the most effective way businesses can overcome the challenges of transfer pricing in Malaysia is by partnering with a knowledgeable corporate services provider.

    “Businesses often don’t have time to monitor all the developments in Malaysia’s rapidly changing tax regulations,” she says. “So it can be helpful to have an expert always on hand to advise on these updates.”

    Premium providers not only have extensive knowledge of local regulations but also maintain open communication with local authorities and industry bodies. This means, armed with their extensive knowledge, they serve as invaluable navigators, assisting your business to adeptly steer through the complex landscape of compliance and governance.

    Another benefit of having a skilled external team support your compliance is that it frees up your executive staff to focus on what really matters to your business.

    “Those running the business have more time to focus on revenue-generating operations,” Woon Chee says. “Why not leave it to the experts so that you can save time and also manage your risk?”

    Tailored support with transfer pricing in Malaysia

    Tailored support with transfer pricing in Malaysia

    BoardRoom provides a full suite of customised business solutions to help your company flourish in the Asia-Pacific region. Our highly sought-after service offerings include Corporate Secretarial, Company Incorporation, Accounting & Bookkeeping and Payroll, among others. With in-depth knowledge of the local tax and regulatory landscapes and a host of resources such as webinars on tax and Budget updates, our specialist Tax Advisory & Filing team can provide quality, customised support to enhance your financial planning and compliance.

    Let us manage transfer pricing compliance for you so you can concentrate on taking your business to new heights.

    Contact BoardRoom for more information:

    Woon Chee MY TAX

    Cheong Woon Chee

    Head of Tax Services for BoardRoom Malaysia

    E: [email protected]

    T: +60-3-7890 4800

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    From ratings to reporting requirements: an overview of ESG in Malaysia

    From ratings to reporting requirements_ an overview of ESG in Malaysia

    From ratings to reporting requirements: an overview of ESG in Malaysia

    boardroomsuperadmin

    With global markets increasingly focused on sustainability and responsible practices, growing businesses must embrace environmental, social and governance (ESG) factors if they are to survive and thrive. Companies that demonstrate a real commitment to reducing their environmental footprint, maintaining positive stakeholder relationships and improving their ways of operating are more likely to attract investors and position themselves for long-term success.

    New methods of measuring and showcasing corporate ESG action and achievements are emerging throughout the Asia-Pacific region.

    The Bursa Malaysia stock exchange encourages action around ESG in Malaysia through the FTSE4Good Bursa Malaysia (F4GBM) Index, an ESG rating system maintained in collaboration with FTSE Russell. The Index is designed to help guide investor decisions, increase the profile of high-performance companies, encourage transparency and support the move to a sustainable economy.

    To help businesses leverage ESG practices and reporting as investment strategies, Bursa Malaysia has also announced it will introduce a new framework on ESG standards by the end of 2023.

    Ahead, we consult Tina Thomas, Head of ESG for BoardRoom, to learn more about ESG frameworks and sustainability ratings in APAC and how businesses can demonstrate high-level compliance.

    Understanding the enhanced ESG framework

    ESG reporting requirements for APAC businesses differ from region to region. In Malaysia, public listed companies are having to adapt to tighter rules enforced by the Bursa Malaysia stock exchange.

    Since ESG reporting was made compulsory for listed companies in 2016, companies have had the flexibility to use the reporting framework of their choosing. Now, Bursa Malaysia is introducing more stringent reporting requirements in a phased, multi-year approach, with the view to bolster the resilience of listed companies and encourage more investment.

    “If you look at the reports that were done prior to last year, every report looked different, as it was up to companies to decide what to report,” Tina says. “From this year onwards, every company has to report against a mandatory set of factors.”

    The new enhanced Sustainability Reporting Framework will support businesses to adopt international best practices for ESG-related disclosures. It will require companies to report against common indicators, thus promoting standardisation of reporting in the region and boosting investor confidence.

    Understanding the enhanced ESG framework

    About ESG ratings

    The evolution of Malaysia’s ESG reporting requirements has also bolstered the significance of ESG ratings in the region.

    “One way that ratings agencies assess a company is by looking at their sustainability reports,” Tina says. “Because companies have to disclose ESG information annually, ratings agencies can easily compare listed companies and rate them accordingly.

    “They will look at a company’s commitments under their sustainability strategy and check their website to see if the information there aligns with their comments in the report.”

    ESG ratings can be a useful tool in the pursuit of enhanced corporate sustainability.

    “It’s an opportunity for companies to understand how they’re performing against their peers and improve their ESG credentials,” Tina says. “So the ratings can help encourage a culture of change within companies.

    “If a company has a poor ESG rating, it means that some elements of ESG have not been managed well. These elements might critically impact operations and, therefore, indicate a level of risk that a company is facing.

    “This gives companies an opportunity to implement actions to mitigate that risk.”

    The challenges of ESG ratings in Malaysia

    While ESG ratings may be a promising tool on the path towards sustainability, the challenges they pose for Malaysian businesses are as follows:

    • Ratings are limited to large-cap companies
    • Scoring methodologies differ
    • One rating for ESG may not be sufficient
    • Quality ESG reporting can be difficult.
    Ratings are limited to large-cap companies
    Currently, only large-cap companies are rated on their ESG efforts, meaning that small-to-medium enterprises (SMEs) miss out.

    “The Malaysian market is dominated by SMEs, but they are not being rated because there’s no huge investor interest,” Tina says. “So if you think about who’s being tracked and that the majority of companies in Malaysia are SMEs, there’s a big gap.”

    Many SMEs are eager to elevate their ESG performance, but the lack of ratings in their bracket makes peer-to-peer assessment and benchmarking difficult.
    Scoring methodologies differ
    The FTSE Russell ESG ratings methodology, used by Bursa Malaysia, is only applicable to a small portion of the market (large-cap companies), with independent ratings agencies free to employ any scoring system of their choosing.

    “So we’re seeing considerable differences in how companies are being rated,” Tina confirms.

    The absence of a universal ratings methodology means that many businesses are finding it hard to set meaningful targets.
    One rating for ESG may not be sufficient
    Environmental, social and governance factors are distinct domains requiring different strategies and approaches. Therefore, a single ESG rating may not provide an accurate picture of a company’s sustainability efforts.

    “For example,” Tina says, “an oil and gas company might look after their people well and invest in training. It might be well-run and have really good practices. But when it comes to the environmental aspect, it doesn’t fare well.

    “This is one of the reasons that the credibility of ratings is being challenged. Personally, I feel that ESG should not be grouped together.”

    Having separate ratings for environmental, social and governance would help investors to:

    • understand specific areas where a company excels or needs improvement; and
    • make better decisions based on their specific interests and concerns.
    Quality ESG reporting can be difficult
    Without professional support, many businesses struggle to produce impactful sustainability reports.

    “One of the challenges is understanding what to measure, what good data looks like and how to report it effectively,” Tina says. “Also, businesses often ask what good targets look like and how they might achieve net zero.”

    Robust reporting involves the collection and analysis of vast amounts of data. Often, businesses lack the processes, resources and expertise to execute these tasks in an effective and timely manner.

    In addition, as listed companies are only required to report annually, the prospect of generating an accurate, meaningful report incorporating a year’s worth of data can seem daunting at best – and impossible at worst.

    “Sometimes the numbers are not current or just made up,” Tina says.

    How to strengthen your ESG compliance

    Wherever your business is located, proper compliance with ESG reporting requirements can have a variety of benefits. It can help attract investment, improve your corporate reputation, minimise your risk of penalties for non-compliance and more.

    Remember, ESG ratings agencies look to sustainability reports as part of their assessment process. So, if you want to improve your rating, your reports can be valuable for communicating your efforts, achievements and commitments.

    The first step to strengthening your ESG compliance is to partner with a reputable corporate services provider with comprehensive ESG services.

    A skilled provider can help you to:

    Review all business practices and operations to identify the environmental, social and governance areas that are material to your company
    Identify the specific data you need to track based on your material topics
    Establish clear and compelling ESG targets and metrics based on your business values and goals, peer benchmarking and the latest reporting standards
    Develop a tailored ESG strategy containing measurable goals, key performance indicators and a clear roadmap for the years ahead
    Conduct stakeholder consultations to understand their expectations and involve them in your strategy development
    Implement robust data collection and management systems to ensure the accuracy and reliability of information
    Leverage a purpose-built digital platform such as BoardRoom’s ESG Access to automate and streamline your processes for data collection, analysis and reporting
    Integrate ESG principles and values into your business strategy and structure to encourage a culture that embraces sustainability practices and reporting
    Understand which ESG regulations apply to your company and what you need to do to comply
    Produce compliant sustainability reports that effectively communicate your company’s ESG wins and goals to shareholders, staff, investors and the public

    A specialist team will collaborate with key personnel in your organisation to execute these tasks and ensure the best outcomes. According to Tina, they can also assist with briefing directors on your company’s ESG progress and direction, a requirement in Malaysia.

    “The directors’ briefing is important because the directors are ultimately responsible for ESG reporting,” Tina says. “At the briefing, we go through what your last year’s metrics looked like, what your peers are doing and what you need to consider over the next few years.

    “It’s an opportunity to influence your next steps as a business.”

    Elevate your ESG performance

    Elevate your ESG performance

    ESG is a transformative force shaping the future of business in APAC. Understanding the intricacies of ESG frameworks and ratings is essential for business executives navigating this evolving landscape.

    If you are expanding operations into Malaysia, our experienced company incorporation and ESG teams can work together to embed strong ESG practices and values into your business from the beginning. Our knowledgeable company secretarial specialists can also help ensure the corporate governance aspect of your ESG strategy exceeds expectations.

    BoardRoom’s end-to-end ESG service provides customised solutions and support to help you emerge as a leader in the sustainability space. Contact us to get started.

    Contact BoardRoom for more information:

    Tina Thomas_profile

    Tina Thomas

    Head of Environmental, Social and Governance

    E: [email protected]

    T: +60-3-7890 4800

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    Malaysia Budget 2024 – Tax Highlights

    MY 2024 Budget Report Banner

    Malaysia Budget 2024 – Tax Highlights

    boardroomsuperadmin

    Malaysia’s 2024 Budget introduced several tax reforms which will impact local businesses and disposable income of general Malaysians.

    On 13 October 2023, Malaysia’s Prime Minister and Finance Minister, YAB Dato’ Seri Anwar bin Ibrahim, presented the Budget 2024 focusing on three pivotal areas:

    • optimising governance for enhanced service agility
    • economic restructuring to foster growth, and
    • elevating the standards of living for Malaysian citizens.

    The expansionary budget is designed to address contemporary challenges and enhance the quality of life for Malaysians.

    To fortify the government’s fiscal responsibilities, reduce the deficit to 4.3%, and augment revenue to RM307.6 billion, the budget incorporates significant structural changes to the tax system, including:

    • E-invoicing for taxpayers with an annual turnover above RM100 million (starting 1 August 2024)
    • Capital Gains Tax (CGT) arising from the disposal of unlisted shares in local companies (starting 1 March 2024)
    • Global Minimum Tax (GMT) applicable to large multinational enterprises (MNEs) with global revenue of at least EUR 750 million (starting in the year 2025)
    • Service Tax will be raised to 8% for all services except food, beverage, and telecommunication services
    • Luxury Goods Tax ranging from 5% to 10%

     

    Download our Budget 2024 Report today to find out more. If you have any questions, please reach out to your respective BoardRoom client managers or email us at [email protected].

    DOWNLOAD THE FULL MALAYSIA BUDGET 2024 REPORT

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    How full suite share registry services help with AGM preparation

    How full suite share registry services help with AGM preparation

    How full suite share registry services help with AGM preparation

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    Annual general meetings (AGMs) play a pivotal role in shaping the future of public companies by encouraging informed decision-making and strategic planning. These crucial gatherings bring together key stakeholders, including board members and shareholders, to collectively steer the company’s direction. They can help your company build shareholder confidence and maintain a competitive advantage.

    In addition to traditional share registrar duties, a full suite share registry services provider can offer support for various types of meetings such as AGMs, extraordinary general meetings, and special general meetings, provide companies with secure processes to protect clients’ data while also offering a wide range of polling solutions and assistance for companies navigating the complexities of IPO listings. In this article, we focus on how full suite share registry service providers can empower businesses to prepare their board members for AGMs, with the view to facilitate meaningful shareholder engagement and promote strong compliance with local regulations.

    Understanding annual general meetings

    AGMs hold a critical place on the corporate calendar. They provide a platform for stakeholders to convene, deliberate and make decisions that shape the future trajectory of a company.

    Per the Malaysian Companies Act, public companies must adhere to local AGM regulations regarding the following:

      Timing
      AGMs must be held once every calendar year, within six months of the company’s financial year-end and no more than 15 months from the last AGM.
      Location
      Companies incorporated in Malaysia must hold their AGM in Malaysia, regardless of whether the meeting mode is physical, virtual or hybrid.
      Quorum
      Unless the company has only one member, at least two people must be present at the AGM. Proxy attendance is permitted.
      Notice period
      Attendees must have at least 21 days written notice of the AGM date, but a 28-day notice period is advised for good corporate governance.

      In the lead-up to an AGM, the company secretary plays a pivotal role in preparing for regulatory compliance, precise documentation, and smooth communication, all essential for a successful shareholder assembly. However, AGM attendance rules and their adherence are the responsibility of the chair.

      Poor compliance can have serious consequences for your business. Disordered or legally invalid meetings can lead to shareholder complaints, fines and reputational harm, and recovering can take significant time and resources. Meanwhile, compliant AGMs that encourage open, orderly discussion will help to foster stakeholder confidence and bolster your corporate reputation.

      It is not unusual to feel daunted at the prospect of ensuring all your AGM obligations are satisfied, especially when requirements and standards vary for physical, virtual and hybrid formats. As a solution, many businesses engage professional full suite share registry service providers for personalised assistance with running productive, efficient and compliant AGMs.

      Preparing board members for AGM attendance

      Mandatory participation in the company’s AGM stands as a responsibility of board membership. AGMs play a crucial role in demonstrating your company’s commitment to transparency and accountability. Well prepared board members ensure a well run AGM that will leave a positive impression on shareholders and enable businesses to spend more time on strategic planning and less on administrative work. Your company can prepare for a successful AGM by:

      • understanding the company’s regulatory obligations for running a physical, virtual or hybrid meeting;
      • reading meeting materials thoroughly at least one week prior to the meeting and asking clarifying questions ahead of the meeting;
      • providing sufficient notice to shareholders of the date, time and location of the meeting;
      • sending clear instructions to shareholders explaining how they can attend the meeting, access relevant documents and participate in discussions and polls;
      • providing detailed information to shareholders about matters for discussion;
      • ensuring shareholders will have the opportunity to ask questions at the meeting and vote on important matters relating to the company’s governance;
      • anticipating shareholder questions in advance and formulating helpful answers (without divulging sensitive information such as trade secrets); and
      • preparing a shareholder presentation before the AGM to highlight company milestones, achievements and financial highlights.

      Preparing an AGM can be a complex, time-consuming process. Partnering with an experienced full suite provider that offers share registry, meeting and corporate secretary services can reduce the burden on your company during the planning stage and further minimise your risk of non-compliance.

      Preparing board members for AGM attendance

      Mitigating technology risks in AGMs

      As AGMs evolve to accommodate diverse formats, technology has emerged as both an enabler and a potential hurdle. According to Alex Chew, Director of Share Registry Services for BoardRoom Malaysia, the technology risks of AGMs vary depending on the meeting mode selected.

      “If it’s a virtual meeting, then connectivity is a key risk, especially as it has a third-party element,” he says. “Ensuring a good connection as the meeting organiser is only half of the success – for best experience, remote participants at home or in the office need to ensure good, stable, and unfiltered internet connection besides having a good working device.”

      In physical meetings, power outages and hardware failure (e.g. audiovisual equipment and electronic voting systems) can also cause problems.

      Businesses can effectively mitigate technology risks and ensure meeting continuation by implementing thorough contingency plans.

      “For virtual and hybrid meetings, we take steps to ensure a dedicated connection and backups are in place, and we also educate remote participants on how to achieve a good connection,” Alex says. “In physical meetings, we always prepare backup hardware equipment to ensure service continuation and minimise any disruption risk.”

      Mitigating technology risks in AGMs

      Engaging advanced share registry services in Malaysia

      In Malaysia, where digital technology is rapidly advancing and regulations are becoming more complex, businesses must embrace innovation to keep up with AGM trends. Thus, selecting a meeting services provider specialising in powerful, secure, easy-to-use digital meeting technology is important.

      “At BoardRoom, we partner with a reputable meeting platform Lumi Global, which is a certified system that supports all types of meetings,” Alex says. “The system is designed to manage all aspects of security risk.”

      Expert full suite providers like BoardRoom, powered by premium general meetings platforms, like Lumi Global provide a variety of features that empower you to:

      • implement AGM best practices and strategies to enhance engagement, streamline proceedings and promote transparency; and
      • satisfy regulatory requirements with ease (e.g. live voting and Q&A).

      For example, a popular time-saving strategy in virtual and hybrid meetings is to designate moderators or team members who can monitor the live chat and help answer repeat questions.

      “This means your Chairman won’t need to deal with the same questions over and over again, which can help to cut meeting times,” Alex explains.

      Another smart strategy is inviting shareholders to submit questions before the AGM, allowing the board to group similar themes and prepare insightful answers in advance.

      Comprehensive AGM support

      Comprehensive AGM support

      Planning and executing smooth and strategic AGMs can be a complicated task. By ensuring your board members are well-prepared and engaging the support of full suite share registry experts, you can ensure every meeting provides real value to shareholders and achieves strong compliance.

      BoardRoom leads the way for quality full suite share registry services in Malaysia, managing upwards of 350 AGMs and general meetings every year for a diverse range of clients. Our wealth of experience, deep knowledge of local regulations and high-level technological expertise make us the provider of choice for AGM support.

      According to Alex, many clients choose to partner with BoardRoom due to the unrivalled flexibility of our service.

      “Our tailored services have the agility to meet your unique business requirements as they evolve,” he says. “Lumi Global has the agility to accommodate various meeting modes and can be adapted to align with your company constitution.”

      BoardRoom also provides complementary company secretarial services as part of our suite of corporate services, making it quick and easy for clients to access quality support across business functions. Whether you’re a small startup or a sprawling multinational corporation, our qualified business specialists work together to help your business achieve its goals and thrive within Malaysia and beyond.

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      What to know about outsourcing payroll services: cost and benefits

      What to know about outsourcing payroll services_ cost and benefits

      What to know about outsourcing payroll services: cost and benefits

      boardroomsuperadmin

      As with many core business functions, the payroll landscape in Malaysia is undergoing rapid change. Amid technological advancement, evolving regulations and a robust employment environment, many businesses are now working with specialist third-party providers for support in bringing their payroll practices up to modern standards.

      Outsourcing payroll has proven to be an effective solution that not doing so may cost you your competitive edge. From enhancing your decision-making through data to strengthening your future planning and economic resilience, it offers a variety of advantages that can help you stay ahead of the curve.

      Read on as Ken Wong, BoardRoom’s Managing Director for Payroll, Asia, explores the key ways that quality outsourced payroll services can help your business succeed in Malaysia and beyond.

      Engaging a payroll agency or provider can help ensure compliance

      Payroll regulations in Malaysia are intricate and ever-evolving. Maintaining compliance can be complicated and time-consuming, especially if you’re unfamiliar with the local legislation or have limited resources to work with.

      According to Ken, recent changes to local regulations – geared towards ensuring the fair and equitable treatment of employees – have accelerated the shift towards outsourcing.

      “As of 1 January 2023, an amendment was made to the Employment Act, which has been in place for about half a century,” he says. “The changes introduced were quite significant in terms of what companies need to do to stay compliant.”

      Key changes introduced in the Employment (Amendment) Act 2022:

      • The Act now covers all employees, regardless of how much they are paid.
      • The maximum weekly hours an employee can work has reduced from 48 to 45.
      • There has been an increase in maternity leave from 60 to 90 days in accordance with international standards.
      • There has been an increase in paternity leave from 5 to 7 days.
      • Women cannot be fired due to pregnancy or sickness resulting from pregnancy.

      Bringing your payroll processing in line with legislative changes like these can be difficult, particularly if you’re new to the region. A payroll agency with strong local regulatory expertise can help you determine which of your employees will be impacted by new rules and how they will be affected. As a result, you can have confidence your payroll calculations are correct.

      Inaccurate payroll calculations are not worth the risk, as they can lead to compliance issues that incur significant financial penalties, damage your corporate reputation and erode employee trust.

      Ensure long-term business continuity

      In Malaysia’s competitive employment landscape, where retaining employees is a common challenge, specialist payroll providers can help with ensuring business continuity and safeguarding your long-term success.

      A major risk of managing payroll in-house is that key personnel can resign at any time, taking their skills and knowledge with them. Key personnel going on long, sick or maternity leave may also have a significant impact on payroll operations. Quickly finding and training a capable replacement may be tricky and expensive, leading to payroll issues that impact all employees. Payroll outsourcing removes this risk, as your provider will have the resources to ensure your payroll is consistently managed to a high standard, even when unexpected disruptions come your way.

      Outsourcing payroll can also facilitate greater flexibility as your business grows or changes. Whether you are undergoing rapid expansion, entering a new geography, or faced with the need to trim headcount, outsourcing your payroll not only allows you to effectively manage costs but also ensures compliance whilst fostering a positive employee experience.

      Additionally, it can help save on costs, allowing you to redirect funds that would have been spent on wages and training into activities that drive revenue growth.

      Ensure long-term business continuity

      Enhance efficiency through process improvement

      Another way payroll outsourcing can help future-proof your business and fuel its growth is by optimising internal processes.

      “If you have been conducting payroll in-house, you likely won’t have the systems that can help you manage data across different platforms nor the resources to streamline your processes,” Ken says. “When you engage a provider, they can implement the systems, so you can spend less time on manual tasks like data entry.”

      Compensation packages in the APAC region are evolving to accommodate diverse talent needs, global market competitiveness, and intricate regulatory landscapes, resulting in their increasing complexity. Examples of these include performance-based bonuses tied to both individual and company metrics, stock options vesting over several years, housing allowances, education allowances for dependents, retirement fund contributions and profit-sharing plans. As such, ensuring staff are paid accurately and on time is now often a tedious task that places unnecessary strain on resources. By improving the efficiency of your payroll function, payroll providers can help alleviate administrative burdens on staff, giving them more time to focus on higher-value strategic work, such as growing the company and enhancing its internal culture.

      Enhance efficiency through process improvement

      The possibilities of payroll data

      Payroll systems house a wealth of data that often goes underutilised. Professional payroll providers can help put systems in place to collate and distribute this data in real time, opening up possibilities for informed decision-making at a management level.

      Retrospective analysis of payroll data can provide a range of useful insights, such as employee compensation patterns and budget allocation trends. Business executives can leverage this information to make informed decisions and fine-tune strategies for enhanced efficiency.

      Payroll data can also be used for predictive analytics – a forward-looking approach that uses historical data to anticipate future needs – empowering you to mitigate risks and maximise opportunities in the workforce management space.

      “From a budget standpoint, payroll data analysis can assist with predicting your peaks and troughs so that you can plan for them,” Ken explains. “For example, the data might show that you experience high attrition at the end or start of the year. You can use this information to help with your future planning.”

      Proactive, data-driven planning helps with avoiding workforce issues that may hinder your business growth (eg. staffing gaps), while also enhancing the agility of your business so that it is more capable of adapting swiftly to ever-changing market dynamics.

      Award-winning payroll services

      Award-winning payroll services

      Payroll outsourcing can have valuable benefits for businesses of all sizes.

      A reputable, qualified firm that embraces technological innovation can assist with:

        Implementing a smooth payroll process
        Ensuring strict compliance with local rules and regulations
        Fostering a positive employer–employee relationship
        Responding to immediate or forecasted problems
        Accessing accurate, up-to-date payroll data
        Reducing the administrative load on key staff

        BoardRoom is a leading provider of reliable payroll services in 19 countries and regions in the Asia-Pacific.

        Powered by Ignite, our all-in-one cloud-based payroll and HRMS software, we offer a wealth of multi-country payroll expertise, making us the ideal partner for your expansion into the dynamic Asia Pacific region. Our dedication to compliance, commitment to customer-centric service and powerful human resources management system mean you can depend on us for outstanding payroll guidance and support.

        In 2022, our team was named Best Payroll Outsourcing Partner (Bronze) at the Malaysia HR Vendor of the Year Awards. BoardRoom has also achieved the International Standard on Assurance Engagements (ISAE) 3402 Type 1 attestation, an internationally recognised standard for auditing the internal control system of outsourcing service providers. These industry recognitions and our extensive experience and portfolio of success stories speak volumes of our proficiency in navigating the intricate payroll landscape in Malaysia and the Asia-Pacific region.

        If your company operates internationally, our globally-minded teams have the skills and knowledge to ensure the smooth running of complex cross-border payroll activities. We also provide complementary corporate services alongside payroll for comprehensive, seamless support across business functions.

        Contact us today to learn how our tailored payroll services can add value to your business.

        Contact BoardRoom for more information:

        Ken Wong

        Ken Wong

        Managing Director for Payroll for Asia

        E: [email protected]

        T: +60 3 7890 4800

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        SG-MY-Lumi Meeting Services : Optimising Hybrid AGMs

        Hybrid-Meetings-Tackling-the-Venue-Challenge-Banner

        SG-MY-Lumi Meeting Services : Optimising Hybrid AGMs

        boardroomsuperadmin

        In our recent webinar, ‘2023 AGMs and EGMS – What Have We Learned’, more than 50% of respondents identified cost as a major concern when considering hybrid meetings. Many believe that hosting hybrid meetings costs twice as much due to the need for physical venues and remote setup. While rising costs and logistical expenses pose challenges, they also create opportunities for creative solutions.

        One strategy is downsizing venues, prioritising quality over quantity. The key is to strike a balance between limited physical attendance and remote participation.

        Here are our tips on how you can maximise cost efficiency and engagement in your hybrid meetings.

        Download Resource

        Connect with our Meeting Services team today to discuss on how you can promote a dynamic and inclusive meeting environment that serves all stakeholders.

        Contact BoardRoom for more information:

        Richard Lee

        Share Registry Services, Sales Director, BoardRoom Malaysia

        E: [email protected]

        T: +60 3 7890 4700

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