CP38 is an additional tax deduction issued by LHDN. Employers must take an additional monthly deduction from their employees' wages in the form of installments.

The tax deduction is calculated based on the employee's monthly taxable income. This is based on the Tax Deduction Table issued by the Internal Revenue Board of Malaysia (IRBM).

Purpose of the CP38 deduction

The CP38 contribution is in addition to the existing PCB contribution amount. CP38 form is used to settle the pending income tax.

Difference between PCB and CP38

Borang CP38 is used to ease the burden on those who must pay taxes immediately. By having the employer deduct a certain amount from his salary every month for a certain period of time, the employee will be able to better manage his finances and will not be burdened by the large amount of tax payments.

The contribution of CP38 deduction must be instructed by the IRB. The amount deducted and the deduction period must be indicated by the IRB.

On the other hand, the PCB is used to reduce the income tax payable during your annual income tax return.

How to submit and pay your PCB and CP38?

For employers that do not have a computerized payroll system, PCB payment is made via e-CP39. This is an online platform that employers use to submit their monthly tax payments and deductions.

Employers that have a computerized payroll system use e-Data. The employer will use the payroll system to generate a text file that contains all the information of the monthly tax deduction and will send it through e-Data. Payment will be made using FPX services in e-Data. Using e-Data saves time and simplifies the submission of monthly payroll contributions.