(Tax Update) Socso Salary Ceiling Raised to RM6,000—What Employers Need to Know

(Tax Update) Socso Salary Ceiling Raised to RM6,000—What Employers Need to Know
View Full Size

(Tax Update) Socso Salary Ceiling Raised to RM6,000—What Employers Need to Know

Effective October 1, 2024, the Social Security Organisation (Socso) in Malaysia will increase the insured salary ceiling from RM5,000 to RM6,000. This change, introduced through amendments to the Employees' Social Security Act 1969 and the Employment Insurance System Act 2017, is part of the government's efforts to enhance social protection for employees.

What Does This Mean for Employers?

The increase in the salary ceiling directly impacts employer contributions, especially for those with employees earning between RM5,000 and RM6,000 per month. As of October 1, 2024, employers will need to adjust their payroll systems to comply with the new contribution rates.

Here’s a breakdown of the changes:

Impact on Employer Contributions:

Higher contributions

Employers will need to contribute more for employees whose salaries fall between the new RM5,000 and RM6,000 threshold.

Expanded coverage

This adjustment affects both local and foreign workers, impacting around 1.5 million employees or 15.5% of Socso contributors nationwide.

Immediate compliance

Employers must start making contributions according to the new salary ceiling from October 1, 2024.

Employer Responsibilities:

Update payroll systems

Employers are required to ensure their payroll systems reflect the new contribution rates for affected employees.

Maintain accurate records

Contributions must be clearly reflected in employees’ pay statements for compliance and audit purposes.

Adhere to regulations

Non-compliance could result in penalties or legal consequences, making it crucial to follow the updated rules from the start.

Benefits and Implications for Employers and Employees:

Enhanced employee benefits

Employees earning above RM5,000 will benefit from improved disability, pension, and job search allowances, with up to a 20.2% increase in interest payments.

Strengthened social protection

This move will enhance overall social protection under the Employee Social Security Act and the Employment Insurance System Act, providing workers with better security.

Cost implications for employers

While this reform benefits employees, employers—especially SMEs—should be prepared for higher contribution costs, which may impact their operational budgets.

Conclusion

Although the increased salary ceiling means higher contributions for employers, it is a step towards strengthening the nation's labor market and ensuring better social protection for workers. Employers must act now to update their payroll systems, keep accurate records, and ensure compliance to avoid penalties.

This change presents both opportunities and challenges for businesses, but it ultimately aligns with the government's broader aim to improve the social safety net for all workers in Malaysia.

We look forward to helping you navigate these changes smoothly.

Warm regards,

KTP Team

Visit Us

  • Wisma KTP, 53 Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

  • Wisma THK, 41, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru

KTP (Audit, Tax, Advisory)

An approved audit firm and licensed tax firm operating under the KTP group based in Johor Bahru providing audit, tax planning, advisory and compliance services to clients

THK (Secretarial, Bookkeeping, Payroll, Advisory)

A licensed secretarial firm in Johor Bahru providing fast reliable incorporation, secretarial services, corporate compliance services, outsourcing bookkeeping, and payroll services to clients

KTP Lifestyle

An internal community for our colleagues on work and leisure.

KTP Career

An external job community on vacancies in Johor Bahru for interns, graduates & experienced candidates.

#Thk

#KTP


 

THK Group of Companies THK Management Advisory Sdn Bhd 200401000220 (638723­X) THK Secretarial PLT 202304003367 (LLP0037327-LGN)

Wisma THK, No. 41, 41-01, 41-02, Jalan Molek 1/8, Taman Molek, 81100 Johor Bahru, Johor, Malaysia.
+6012-771 7903 (Secretary Department)
+6012-771 7803 (Account Department)
+607-361 3443
 

PDPA Form

 
 
Switch to Mobile Version
Subscribe Newsletter