Complete Guide to Form EA and Form E in Malaysia (2025 Edition)

Introduction: Why EA and E Forms Matter

In Malaysia, income tax compliance is not just the responsibility of individuals—it also requires active participation from employers. Two key documents at the heart of personal income tax filing are Form EA and Form E. These forms play an essential role in ensuring transparency and accurate reporting of employment income to the Inland Revenue Board of Malaysia (LHDN). Understanding how and when to prepare these forms is crucial for both employers and employees to meet their respective tax obligations.

Form EA is issued to employees, summarizing their income and deductions for the year, while Form E is filed by employers, reporting the total remuneration paid and confirming the issuance of Form EA. Together, these forms facilitate seamless tax filing through Malaysia’s e-Filing system and prevent discrepancies that could lead to penalties or audits. Whether you’re an employer managing payroll or an employee getting ready to file your tax return, this guide will walk you through everything you need to know in detail.

What is Form EA? (Employee’s Statement of Remuneration)

Form EA is a crucial document provided by employers to their employees by the end of February each year. It is an annual statement that outlines the total earnings, deductions, and benefits received by the employee throughout the assessment year. This form is essential for employees to accurately complete their tax returns (Form BE or e-BE) as it consolidates all taxable and non-taxable components of their remuneration. The issuance of Form EA is mandatory for all employees who earn employment income, including salaries, bonuses, commissions, allowances, and benefits-in-kind.

The form includes detailed sections such as gross salary, benefits-in-kind (BIK), perquisites, EPF and SOCSO contributions, PCB deductions, and the total remuneration paid. For example, company-provided housing, transportation, insurance, or club memberships should be clearly recorded under the appropriate headings. Employees rely on this information to declare their income truthfully, and inaccuracies in Form EA can lead to underpayment or overpayment of tax. As such, it is in the best interest of both employer and employee to ensure that Form EA is complete, correct, and issued on time.

You can find the official explanation and format of Form EA on the LHDN’s official website, which provides guidance for employers on completing and issuing the form in accordance with Malaysian tax regulations.

What is Form E? (Employer’s Annual Return Form)

While Form EA pertains to individual employees, Form E is the annual declaration submitted by employers to LHDN. It serves as a summary of the employer’s payroll activity and confirms the issuance of Form EA to all eligible employees. Form E is mandatory for every employer in Malaysia who has employees, even if the business has only one staff member. The deadline for submission of Form E is 31 March of the following assessment year, and filing must be completed through the LHDN’s online portal via the ezHASiL system.

The contents of Form E include employer information, number of employees, total gross remuneration paid during the year, and a declaration that EA forms have been distributed. It also requires details of monthly PCB payments made under Form CP39 and any discrepancies that may have occurred. Form E ensures that the LHDN receives a consolidated report of employment income paid by a company, serving as a verification tool for employee filings. Failure to submit Form E can result in penalties, making timely and accurate submission a top priority for HR and payroll departments.

Step-by-Step Guide for Employers

How to Prepare and Submit Form EA

To prepare Form EA, employers must gather all relevant payroll records for the year, including base salary, overtime, bonuses, commissions, and allowances. They must also calculate the value of benefits-in-kind and perquisites, such as the use of a company vehicle, housing, or paid club memberships. This comprehensive data must be compiled into Form EA and distributed to each employee by the end of February. Many businesses use payroll software to automate this process and ensure compliance with the necessary fields and reporting format.

Once prepared, Form EA can be provided to employees either in print or electronically. It is essential to ensure the totals align with CP39 records and internal payroll data to prevent discrepancies during employee tax filing. Maintaining consistency across these reports can save time during tax season and protect against unexpected queries from LHDN. Employers are also advised to retain copies of all issued Form EA documents for at least seven years as required by law.

How to File Form E via e-Filing

To submit Form E, employers must log into their ezHASiL account on the LHDN e-Filing platform. Under the employer services section, they can access the “e-E” module and begin entering required information. This includes the total number of employees, total remuneration paid, monthly PCB deductions, and confirmation that Form EA has been issued to employees. Employers should double-check the figures entered against their internal payroll records to ensure consistency before finalizing the submission.

After completing the form, it must be submitted by 31 March to avoid penalties. Upon submission, employers will receive a digital acknowledgment receipt that should be stored for reference. Filing Form E electronically not only reduces administrative burden but also helps maintain better records for future audits or LHDN correspondence. Employers who are unfamiliar with the filing system may consider engaging payroll professionals or tax agents to assist with the submission process.

For reference, employers can refer to the official Form E e-Filing Guide provided by LHDN to ensure accurate online submissions.

Common Mistakes to Avoid

One of the most frequent mistakes employers make is failing to issue Form EA to employees by the required deadline. Some may forget entirely, while others may issue incomplete or inaccurate statements that do not reflect actual earnings or deductions. Another common error is omitting benefits-in-kind or failing to categorize allowances properly, which can result in mismatches when employees attempt to file their taxes. It is also critical to reconcile PCB deductions reported in CP39 with what is shown in the EA forms.

Errors in Form E submission can be equally problematic. Failing to report the correct number of employees, inconsistencies in total remuneration, or skipping the declaration of EA issuance can trigger red flags at LHDN. Some employers mistakenly believe that Form E is optional, especially if they have only one or two staff members, which is incorrect. All employers must comply with this annual requirement regardless of company size, and any oversight could lead to fines or enforcement actions.

Penalties for Non-Compliance

Employers who do not file Form E by the 31 March deadline are subject to significant penalties under Malaysia’s Income Tax Act. The fine ranges from RM200 to RM20,000, and in some cases, may also include imprisonment for up to six months. The severity of the penalty depends on whether the delay was intentional, repeated, or due to negligence. Even if no tax is owed, the mere failure to file can attract penalties, which makes timely submission essential.

Likewise, not issuing Form EA to employees is considered a breach of employer responsibilities. Employees rely on this document to file their personal tax returns, and any delay in issuance can impact their compliance with tax deadlines. In addition to legal consequences, failure to comply with EA and E requirements can damage an employer’s credibility with both staff and tax authorities. Therefore, it is highly recommended that employers establish a yearly routine to prepare and submit these documents on time.

Best Practices for HR and Payroll Teams

HR and payroll departments play a critical role in managing compliance with EA and E form requirements. One of the best practices is to maintain a payroll checklist that includes deadlines, document templates, and key personnel responsible for preparation and submission. Automating payroll processes through reliable software solutions can also reduce human error and streamline EA generation. Furthermore, setting internal reminders starting in January can ensure that EA forms are ready for distribution by February.

Another recommended practice is to conduct a payroll audit at year-end to ensure all income and deductions have been captured accurately. This includes cross-verifying PCB payments, EPF contributions, benefits-in-kind valuations, and matching these figures with employee records. Training HR staff on LHDN filing procedures and changes in tax legislation can also enhance overall compliance. Keeping detailed records of past submissions, including digital acknowledgments, can protect the business during audits or employee disputes.

Frequently Asked Questions (FAQs)

Is Form EA required for part-time or contract employees?

Yes, if they have received any form of employment income from the company, including allowances or bonuses. Form EA must be issued regardless of whether the employee is full-time, part-time, or on contract, as long as income was paid during the assessment year.

What if an employee leaves before the end of the year?

The employer is still obligated to issue a Form EA covering the period of employment. The form must reflect the income paid during that time, including any final payments such as gratuities or severance packages.

Can Form EA be sent via email?

Yes, LHDN allows digital issuance of Form EA as long as it is properly formatted and secure. Employers are advised to use PDF format and ensure the documents are accessible and confidential.

What if I miss the Form E deadline?

You should submit it as soon as possible to reduce the risk of penalties. If you face technical issues, contact LHDN immediately for guidance or consider working with a tax agent to resolve the matter.

Final Thoughts

Form EA and Form E are fundamental components of Malaysia’s income tax system and are closely linked in their function and reporting timelines. These forms are not just technical requirements—they represent an employer’s commitment to compliance and accurate income reporting. Both documents must be handled with diligence, transparency, and on schedule to avoid complications for both employers and employees.

If you’re unsure about how to prepare or submit these forms, don’t hesitate to engage a licensed tax agent or payroll service provider. With the proper tools and knowledge, meeting your Form EA and Form E obligations can be a seamless part of your annual business routine. Make compliance easy and protect your company’s reputation by preparing ahead and filing accurately every year.