Guides
PPDK: Tax on Non-Resident Foreign Workers — An Employer's Guide
Updated: 8 November 2026 Independently fact-checked.
What is PPDK?
In practice, "PPDK" (Potongan Percukaian Daripada Kerja) refers to the monthly tax deduction from an employee's remuneration — that is, what is commonly known as MTD/PCB (Monthly Tax Deduction).
This article focuses on foreign workers who are non-residents — that is, workers who are not resident in Malaysia for tax purposes. For them, the employer must make deductions at the flat rate of 30%, without taking into account personal reliefs.
Source: HASiL — Public Ruling No. 2/2026; HASiL — Computerised PCB Calculation Method Specification 2026 (see Official sources section).
Resident vs non-resident status
Residence status principle: an individual is a non-resident if their presence in Malaysia is less than 182 days in the basis year.
For foreign workers in Malaysia, this status determines the tax rate, the form to be filed, and whether personal reliefs are given. Non-resident foreign workers are taxed at a flat 30% on chargeable income with no personal reliefs (paragraph 1A, Part I, Schedule 1 of the ITA 1967).
Source: HASiL — Public Ruling No. 2/2026; HASiL — Non-Resident Individuals; HASiL — Introduction to Individual Income Tax (see Official sources section).
The 30% rate and no personal reliefs
Non-resident workers are taxed at a flat rate of 30% on chargeable income. They are not eligible for any personal reliefs or deductions (paragraph 1A, Part I, Schedule 1 of the ITA 1967).
This differs from resident workers, who are taxed at progressive rates and are eligible for personal reliefs.
Monthly deduction by employers: MTD/PCB = 30% of remuneration
MTD/PCB for non-resident workers is calculated at 30% of remuneration. Official HASiL example: remuneration RM3,000 → MTD RM900.
Tax-exempt allowances/benefits (e.g. exempt perquisites) are excluded from the MTD calculation base.
Source: HASiL — Computerised PCB Calculation Method Specification 2026; HASiL — Operational Guideline No. 1/2024 (see Official sources section).
Remitting deductions to HASiL
Employers must deduct PCB and remit it to HASiL before or on the 15th of the following month. Remittance is only through electronic channels: e-PCB / e-Data PCB / e-CP39.
Other employer obligations: submit Form CP22 for new employees within 30 days, and keep records for 7 years.
Source: HASiL — Employer Responsibilities (see Official sources section).
Income exemption for periods ≤ 60 days
Employment income in Malaysia for a period not exceeding 60 days in the basis year is exempt from tax (paragraph 21, Schedule 6 of the ITA 1967).
This exemption does not apply if:
- the whole employment period in Malaysia exceeds 60 days; or
- a continuous period exceeds 60 days and overlaps two basis periods.
Important: this exemption is not automatic — it must be claimed when filing the Income Tax Return Form (BNCP) with supporting evidence.
Source: HASiL — Public Ruling No. 2/2026 (paragraph 21, Schedule 6) (see Official sources section).
Forms to be filed
- Form M — for non-resident workers who are taxed; deadline 30 April of the following year.
- If the worker's status is resident, Form BE/B is used as applicable.
Source: HASiL — Public Ruling No. 2/2026; HASiL — Non-Resident Individuals (see Official sources section).
Year-end adjustment
At year-end, the total MTD withheld by the employer is compared with the actual tax computed in the worker's assessment. If more MTD was withheld than the actual tax, the worker receives an overpayment (refund); if less, the worker must pay the balance due. This follows the self-assessment system principle.
Source: HASiL — Public Ruling No. 2/2026; HASiL — Non-Resident Individuals (see Official sources section).
Frequently Asked Questions (FAQ)
Q. What is the tax rate for non-resident foreign workers? A. A flat 30% on chargeable income, with no personal reliefs.
Q. When must I remit the monthly deduction? A. Before or on the 15th of the following month, via e-PCB / e-Data PCB / e-CP39.
Q. My employee works less than 60 days. Is their tax exempt automatically? A. No — the exemption (paragraph 21, Schedule 6) must be claimed when filing BNCP with evidence, and it does not apply if the whole period exceeds 60 days or overlaps two basis periods.
Q. Which form should a non-resident foreign worker file? A. Form M before or on 30 April of the following year. If the worker is a resident, Form BE/B.
Q. What is the difference between residence status and the 60-day period? A. Residence status (presence ≥ 182 days) determines the tax rate and form; the 60-day period is a specific income exemption. They are different concepts.
Glossary
- PPDK — Potongan Percukaian Daripada Kerja (practice term; HASiL official documents use MTD/PCB) this item still awaits official confirmation from HASiL — check again with HASiL before deciding.
- MTD/PCB — Monthly Tax Deduction.
- Non-resident — an individual with presence < 182 days in the basis year; taxed at a flat 30% rate.
- Remuneration — what is paid to the employee.
- BNCP — Income Tax Return Form.
- Form M — return form for non-resident individuals (deadline 30 April).
- Basis year — the period whose income is assessed for a year of assessment.
Official sources
All sources below were reviewed on 8 November 2026. Official HASiL pages and documents:
- HASiL — Public Ruling No. 2/2026: Tax Treatment of Foreign Nationals Performing Employment in Malaysia (official PDF, issued 27 March 2026)
- HASiL — Computerised PCB Calculation Method Specification 2026 (official PDF, updated 1 Jan 2026)
- HASiL — Non-Resident Individuals (official page)
- HASiL — Employer Responsibilities (official page)
- HASiL — Operational Guideline No. 1/2024: PCB under the Income Tax (Deduction from Remuneration) Rules 1994 (official PDF)
- HASiL — Introduction to Individual Income Tax (official page)