Key tax and payroll numbers for Malaysian SMEs in 2026
e-Invoice, audit exemption, payroll contributions, SST and tax deadlines, all on one page. Every number comes with an official source and a date checked.
The tax and payroll numbers Malaysian SMEs use most in 2026 are: an e-Invoice exemption threshold of RM3 million (from 1 September 2026); SSM audit exemption thresholds of RM2 million turnover, RM2 million total assets and 20 employees, meeting two of three (financial periods starting in 2026); EPF at 13% or 12% for employers and 11% for employees; a minimum wage of RM1,700; service tax at 8% (6% for some services); and Form C filed within 7 months after the financial year end. These numbers were compiled by the BookKeeper editorial team from official sources and checked on 25 October 2026.
- e-Invoice: businesses with annual turnover below RM3 million that meet the conditions do not need to issue them. The Phase 4 grace period runs until 31 December 2027.
- Audit exemption: meet two of three thresholds, which rise from RM1 million to RM3 million over three years from 2025.
- Payroll: EPF, SOCSO, EIS and PCB are all due by the 15th of the following month.
- SST: service tax is 8%, 6% for some services, and the threshold for most is RM500,000.
- Records: keep accounts and documents for at least 7 years.
When do you need to issue e-Invoices, and what are the phase dates?
An e-Invoice is an invoice validated and issued through LHDN's MyInvois system. Whether you need to issue one depends on which phase your company's annual turnover falls into.
| Phase | Annual turnover | Start date | Notes |
|---|---|---|---|
| Phase 1 | Above RM100 million | 1 August 2024 | |
| Phase 2 | RM25 million to RM100 million | 1 January 2025 | |
| Phase 3 | RM5 million to RM25 million | 1 July 2025 | |
| Phase 4 | RM5 million and below | 1 January 2026 | Grace period until 31 December 2027 |
| Exempt | Below RM3 million and meeting LHDN's conditions | From 1 September 2026 | May stop, or continue voluntarily |
Sources: LHDN e-Invoice (e-Invoice Guideline version 4.8, 30 August 2026). In-depth guide: e-Invoice exemption threshold raised to RM3 million.
Can your company be exempt from audit? What are the 2025 to 2027 thresholds?
Audit exemption means a private limited company that meets SSM's conditions does not need to appoint an auditor to audit its financial statements. It still needs to prepare unaudited financial statements and lodge them with SSM, and still needs to file tax. The company must meet two of the three criteria, for the current year and the two years before.
| Financial period starting | Annual turnover | Total assets | Employees |
|---|---|---|---|
| On or after 1 January 2025 | ≤ RM1 million | ≤ RM1 million | ≤ 10 |
| On or after 1 January 2026 | ≤ RM2 million | ≤ RM2 million | ≤ 20 |
| On or after 1 January 2027 | ≤ RM3 million | ≤ RM3 million | ≤ 30 |
Sources: SSM (Practice Directive 10/2024). In-depth guide: can your company be exempt from audit.
How are financial statements lodged with SSM? When does MBRS 2.0 start?
Financial statements must be converted to XBRL format and lodged through SSM's MBRS (Malaysian Business Reporting System), usually by a licensed company secretary. The general deadline is to circulate them to shareholders within 6 months after the financial year end, and lodge them with SSM within 30 days of circulation.
| MBRS 2.0 effective date | Scope |
|---|---|
| 1 December 2024 | Annual returns and unaudited financial statements of Companies Act 2016 companies; EPC financial statements |
| 1 March 2025 | Companies Act 1965 companies, financial institutions regulated by Bank Negara Malaysia, foreign companies and others |
| 1 June 2025 | Audited financial statements and reports of all Companies Act 2016 companies |
Sources: SSM, BDO Malaysia. In-depth guide: what is MBRS 2.0
Which statutory payments must employers make each month, and at what rates?
Each month, employers must pay EPF (KWSP), SOCSO (PERKESO) and EIS for their employees, and deduct PCB (monthly tax deduction, MTD), all by the 15th of the following month.
| Item | Employer | Employee | Notes |
|---|---|---|---|
| EPF (local employees) | 13% (salary ≤ RM5,000) / 12% (> RM5,000) | 11% | By the 15th of the following month |
| EPF (foreign workers) | 2% | 2% | From October 2025 |
| SOCSO (First Category) | About 1.75% | About 0.5% | Wage ceiling RM6,000, per the official contribution table |
| EIS | 0.2% | 0.2% | Wage ceiling RM6,000 |
| PCB (MTD) | Deducts and remits | As calculated by LHDN | By the 15th of the following month |
| HRD Corp | 1% | None | Covered industries, 10 or more local employees |
| Minimum wage | RM1,700 a month | From 1 February 2025; from 1 August 2025 for employers with fewer than 5 employees | |
Sources: KWSP, PERKESO, LHDN. In-depth guide: before you hire your first employee.
What are the SST rates and registration thresholds?
SST is the Sales and Service Tax. Businesses selling taxable goods pay sales tax, and businesses providing taxable services pay service tax. Once registered, you file SST-02 every two months.
| Item | Figure | Notes |
|---|---|---|
| General service tax rate | 8% | From 1 March 2024 |
| Lower service tax rate | 6% | Food and beverage, telecommunications, parking, logistics and others |
| Sales tax | 5% or 10% | Depending on the category of goods |
| Service tax registration threshold | RM500,000 in 12 months | Most taxable services; some newly added categories have different thresholds |
| SST-02 filing | Every two months | Filed and paid by the last day of the following month |
Sources: MySST (Royal Malaysian Customs Department). Service details: SST registration and filing.
When are the tax filing deadlines?
Using a company with a 31 December year end as the example. e-Filing deadlines for each form follow the filing programme LHDN publishes each year.
| Form | Who files | Deadline |
|---|---|---|
| Form C | Companies (Sdn Bhd) | Within 7 months after the financial year end; e-Filing has a further 1-month grace period |
| Form B | Individuals with business income (Enterprise owners) | 30 June; e-Filing grace period until 15 July |
| Form BE | Individuals without business income | 30 April; e-Filing until 15 May |
| Form E | Employers | 31 March |
| EA form | Issued by employers to employees | By the end of February |
| CP204 | Company tax estimate | Submit 30 days before the new financial year begins, pay in instalments by the 15th of each month; revise with CP204A in the 6th, 9th and 11th month |
Sources: LHDN. SME income tax: 15% on the first RM150,000, 17% on the next RM450,000, and 24% on the remainder (paid-up capital ≤ RM2.5 million and turnover ≤ RM50 million). Keep accounts and documents for at least 7 years (Income Tax Act 1967 section 82; Companies Act 2016 section 245).
You are welcome to quote the numbers on this page. Please credit "BookKeeper, Key tax and payroll numbers for Malaysian SMEs in 2026" and link to this page. Regulations change, so check the latest announcements on the official websites before quoting. Have an accountant confirm your situation based on your company's records.
Not sure what these numbers mean for your company? Tell us your turnover, number of staff and industry.
Ask Us on WhatsAppQuestions you may still have
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Ask on WhatsAppWhat is the e-Invoice exemption threshold in Malaysia for 2026?
From 1 September 2026, businesses with annual turnover below RM3 million that meet LHDN's conditions do not need to issue e-Invoices, or may continue voluntarily. The basis is LHDN e-Invoice Guideline version 4.8 (30 August 2026).
What are SSM's 2026 audit exemption thresholds for private limited companies?
For companies with financial periods starting on or after 1 January 2026, a company that meets two of three criteria (turnover of RM2 million, total assets of RM2 million, 20 employees) for the current year and the two years before can be exempt from audit. From 2027, the thresholds rise to RM3 million, RM3 million and 30 employees.
How much EPF must employers contribute each month?
For employees earning RM5,000 a month or less, the employer contributes 13% and the employee 11%. For monthly salaries above RM5,000, the employer contributes 12%. For foreign workers, from October 2025 the employer and employee each contribute 2%.
What is the service tax rate in Malaysia?
The general service tax rate is 8%. Some services, such as food and beverage, telecommunications, parking and logistics, are taxed at 6%. For most taxable services, the registration threshold is RM500,000 in 12 months.
How long must company accounts and documents be kept?
At least 7 years, under section 82 of the Income Tax Act 1967 and section 245 of the Companies Act 2016.
