What employers should prepare before closing the year
As the year comes to an end, December is a critical month for employers in Malaysia. While many statutory submissions fall in the following year, proper year-end preparation in December can prevent penalties, audit issues, and last-minute stress.
Here is a practical year-end compliance checklist every employer should review before closing the books.
1. Reconcile Payroll Records for the Full Year
Before year-end, employers should ensure that payroll records are accurate and complete for the entire year.
- Verify gross salaries, allowances, bonuses, commissions, and benefits-in-kind
- Ensure unpaid leave, overtime, and salary adjustments are correctly reflected
- Confirm employee details (IC number, tax number, EPF/SOCSO numbers)
👉 Any payroll errors left unresolved may affect EA Forms, PCB calculations, and audit outcomes.
2. Review Statutory Contributions (EPF, SOCSO, EIS & HRDF)
December is the best time to reconcile statutory contributions paid throughout the year:
- EPF employer and employee contributions
- SOCSO & EIS contributions
- HRDF levy (where applicable)
Employers should:
- Match payroll reports with payment receipts
- Identify underpayments or overpayments early
- Rectify discrepancies before the year closes
💡 Statutory payments for December wages will be due in January, but reconciliation should be done now.
3. Prepare for EA Forms (Employee Annual Statement)
Although EA Forms are due by 28 February of the following year, preparation should begin in December.
Employers should:
- Finalise annual remuneration figures
- Confirm taxable and non-taxable items
- Ensure benefits-in-kind and perquisites are correctly disclosed
- Check PCB deducted during the year against actual payroll
Early preparation reduces the risk of incorrect EA Forms, which often lead to employee complaints or LHDN queries.
4. Review PCB / MTD Accuracy
Incorrect PCB deductions are a common issue flagged during tax audits.
Before year-end:
- Ensure PCB calculations follow the latest LHDN schedules
- Verify employee tax residency status
- Review adjustments for bonuses, directors’ fees, or one-off payments
📌 Any under-deduction of PCB may expose employers to additional tax and penalties during an employer audit.
5. Check HR & Employment Records
Year-end is a good time to review employment documentation:
- Employment contracts and amendments
- Salary revision letters
- Resignation and termination records
- Leave balances (annual, unpaid, maternity, etc.)
Proper documentation supports both audit compliance and labour law requirements.
6. Organise Documents for Audit Readiness
Whether your company is subject to:
- External audit
- LHDN tax audit
- Employer compliance audit
Having organised records makes a major difference.
Prepare and file:
- Payroll summaries
- Statutory payment receipts
- Employment contracts
- Directors’ remuneration details
📁 Digital filing is highly recommended for easier access during audits.
7. Set Up Compliance Calendar for the New Year
December is also the right time to plan ahead.
✔ Set reminders for monthly statutory deadlines (15th of each month)
✔ Mark key annual deadlines:
- EA Forms – 28 February
- Form E – 31 March
- CP204 instalments
- Review payroll systems for updates or upgrades
Proactive planning helps ensure smooth compliance throughout the new year.
Engaging a professional accountant or auditor before year-end can help identify issues early and ensure full compliance.