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InsightMonthly Roundup

February 2025 Monthly Roundup

February 26, 20253 min read

As we move further into 2025, here are the latest regulatory updates that may impact businesses, employers, and foreign workers in Malaysia.

Mandatory 2% EPF Contribution for Foreign Workers

The Malaysian government has proposed a mandatory 2% Employees Provident Fund (EPF) contribution for foreign workers, as announced by Prime Minister Anwar Ibrahim. This rate is significantly lower than the initial proposal of 12% and is intended to provide financial security for foreign workers without imposing a heavy burden on employers.

Key points of this policy:

  • The contribution will remain at 2% with no planned increments.
  • The policy follows consultations with business chambers and industry stakeholders.
  • An amendment to the EPF Act 1991 will be tabled in Dewan Rakyat to formalize the change.
  • Further implementation details will be reviewed at the Cabinet meeting before finalizing enforcement.
    Previously, EPF contributions for foreign workers were voluntary, with workers choosing to contribute either 11% (below 60 years old) or 5.5% (above 60), while employers contributed only RM5 under both schemes.

This move is expected to benefit two million foreign workers by providing them with retirement savings, aligning Malaysia’s labor policies more closely with global workforce management standards.

For further updates on this policy, visit EPF’s official website.

Employers Must Notify LHDN of Employee Termination and Deaths

Effective September 1, 2024, employers must notify the Inland Revenue Board (LHDN) regarding employee terminations, resignations, or deaths to facilitate tax clearance.

Key compliance requirements:

  • Notification must be submitted via Form CP22A (for private sector employees) or CP22B (for government employees).
  • Employers must send the notification at least 30 days before termination or within 30 days of a reported death.
  • LHDN will issue a tax clearance letter, ensuring outstanding tax matters are settled before an employee starts a new job or leaves Malaysia permanently.
  • Employers are required to withhold any due payments for 90 days or until the tax clearance letter is issued.
  • Requests to amend employee information must be submitted via e-SPC on the MyTax portal.

Additionally, employers must prepare and issue EA statements (private sector) and EC statements (public sector) by February 28 each year to ensure employees can fulfill their tax obligations on time.

These measures aim to enhance tax compliance and transparency while preventing unresolved tax liabilities when employees leave or transition to a new employer.

Osadi: Your Partner in Workforce Management

At Osadi, we are committed to supporting our clients through these regulatory changes. We’re here to ensure your workforce remains efficient, compliant, and future-ready. Stay tuned for more updates, and don’t hesitate to reach out to our team for personalized assistance as we navigate 2025 together.