Best Payroll Software for Malaysia 2026: EPF, SOCSO, EIS and PCB Compliance
Malaysian payroll is complex — EPF rates by age, SOCSO categories, EIS contributions, and monthly PCB deductions. This guide covers the best payroll software for Malaysian SMEs in 2026.
Why Malaysian Payroll Is More Complex Than It Looks
"Pay salary, transfer money" sounds simple. Malaysian payroll is not. Every month, an employer must correctly calculate:
- EPF (Employees Provident Fund / KWSP): Different contribution rates by employee age bracket, different rates for Malaysian vs non-Malaysian employees
- SOCSO (PERKESO): Two separate schemes — Employment Injury Scheme and Invalidity Scheme — with different contribution tables
- EIS (Employment Insurance System): 0.2% employer + 0.2% employee on wages up to RM 5,000
- PCB (Potongan Cukai Berjadual): Monthly tax deduction from salaries — the correct amount depends on the employee's annual income, tax reliefs claimed, and LHDN's tax tables
- HRD Levy (HRDF): 1% of monthly wages for employers with 10+ employees in specified sectors
For SMEs without a dedicated HR team, payroll software that automates these calculations is not a luxury — it is a necessity.
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The Key Malaysian Payroll Statutory Deductions Explained
EPF (KWSP) Contributions
EPF is Malaysia's mandatory retirement savings scheme. Both employer and employee contribute monthly.
Contribution rates for Malaysian employees:
| Employee Age | Employee Rate | Employer Rate |
|---|---|---|
| Below 60 years | 11% | 13% (wages ≤ RM 5,000) / 12% (wages > RM 5,000) |
| 60 years and above | 5.5% | 6% |
- Employee: 11%
- Employer: 6%
- Optional employee contribution (if they choose to contribute)
- Employer: RM 5 per month (flat)
Payment deadline: By the 15th of the following month.
SOCSO (PERKESO) Contributions
SOCSO provides work injury and invalidity insurance for Malaysian employees. There are two schemes:
Employment Injury Scheme (Scheme I): Covers injuries sustained at work.
Invalidity Scheme (Scheme II): Covers non-work-related total disability.
Who contributes:
- Employees below 60 years: both Employment Injury + Invalidity Scheme (both employer and employee contribute)
- Employees 60 and above, or those who have reached the SOCSO pensionable age: Employment Injury Scheme only (employer only contributes)
- Non-Malaysian employees are exempt from SOCSO
Payment deadline: By the 15th of the following month.
EIS (Employment Insurance System)
EIS provides temporary financial assistance to Malaysian employees who have lost their jobs. Both employer and employee contribute 0.2% of monthly wages, up to a maximum wage of RM 5,000 for contribution purposes.
Maximum monthly EIS contribution: RM 10 employee + RM 10 employer = RM 20/month at the RM 5,000 cap.
EIS contributions are collected together with SOCSO contributions (single payment to PERKESO).
PCB (Potongan Cukai Berjadual — Monthly Tax Deduction)
PCB is the monthly income tax deduction from employee salaries. The employer deducts the correct PCB amount and remits it to LHDN by the 15th of the following month.
How PCB is calculated:
LHDN provides the PCB Calculator (Kalkulator PCB) and the PCB Schedule for manual calculation. Payroll software automates this.
Employee's responsibility: Employees must declare their tax reliefs to their employer via Form TP1. Employees who do not declare reliefs may have excess PCB deducted.
Employer's responsibility: Deduct the correct PCB amount and remit to LHDN by the 15th of each month. Issue Form EA to all employees by end of February for their annual tax filing.
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Best Payroll Software for Malaysian Businesses
1. Kakitangan.com — Best Purpose-Built Malaysian HR and Payroll
Kakitangan is a Malaysian-built cloud HR and payroll platform. It is widely considered the most comprehensive purpose-built solution for Malaysian SMEs.
Features:
- Automatic EPF, SOCSO, EIS, and PCB calculation
- PCB using the latest LHDN tax tables
- EPF and SOCSO contribution file generation (compatible with EPF's i-Akaun and PERKESO's EzPayment)
- PCB payment file for LHDN
- Leave management (annual, medical, maternity, paternity)
- Claims and expense management
- Payslip generation and distribution (digital, email)
- Form EA generation for year-end employee tax filing
- Form E (employer return to LHDN) generation
- Employee self-service portal
Best for: Malaysian SMEs wanting a comprehensive, locally-built HR + payroll system.
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2. HReasiLy — Growing Alternative with Strong UX
HReasiLy is another Malaysian-built HR and payroll platform with a strong user interface and growing feature set.
Features:
- EPF, SOCSO, EIS, PCB calculation
- Leave management
- Claims management
- Payslip generation
- Shopee-style onboarding process (very user-friendly)
Best for: SMEs prioritising ease of use, startup-style companies wanting clean interface.
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3. Autocount Payroll Module
For businesses already using Autocount Accounting, the payroll module integrates payroll directly into the accounting system — salary payment journals are posted automatically, reducing manual entry.
Features:
- EPF, SOCSO, EIS, PCB calculation
- Integration with Autocount accounting
- Payslip generation
- Statutory file generation
Pricing: Add-on to Autocount Accounting
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4. SQL Payroll — Comprehensive Malaysian Payroll Software
SQL Payroll (by the same company as SQL Account) is a dedicated payroll software with strong Malaysian statutory compliance.
Features:
- Complete EPF, SOCSO, EIS, PCB handling
- Multi-company support (for groups with multiple entities)
- Comprehensive reporting
- Integration with SQL Account
Pricing: RM 800–RM 3,000+ one-time
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5. Times Software — For Mid-Sized Companies
Times Software is used by larger Malaysian SMEs and subsidiaries of multinationals for more complex payroll and HR.
Features:
- Full payroll compliance
- Time and attendance integration
- Leave management
- Appraisal and performance management
- Integration with ERP systems
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The EPF, SOCSO, and EIS Payment Process
Step 1: Calculate Contributions via Payroll Software
Your payroll software calculates each employee's contributions based on their monthly wages and age. Review the payroll run before finalising — check a sample of employees manually to verify the software's calculation.
Step 2: Generate Payment Files
EPF (i-Akaun): Payroll software generates a TXT file in the format required by EPF. Upload to i-Akaun Majikan (employer portal) at kwsp.gov.my.
SOCSO/EIS (EzPayment): Payroll software generates the required file for SOCSO contribution submission via perkeso.gov.my.
PCB (e-PCB): PCB remittances are via LHDN's e-PCB online system at hasil.gov.my.
Step 3: Pay by 15th of Following Month
All statutory contributions — EPF, SOCSO/EIS, and PCB — must be paid by the 15th of the following month. Set up GIRO/JompAY for automatic payment to avoid manual bank transfers and the risk of missing deadlines.
SOCSO late payment surcharge: 6% per annum on the outstanding amount. EPF late payment: Penalty up to RM 100,000 or 3 years imprisonment. PCB late payment: 10% penalty on the amount not remitted.
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Form EA and Form E: Year-End Compliance
Form EA (Employee Annual Tax Statement)
Every employee must receive Form EA by the last day of February of the following year. Form EA summarises:
- Total gross income for the year
- EPF contributions (deductible by employee on their personal tax)
- PCB deducted
- Other benefits
Your payroll software generates Form EA — ensure it is accurate and distributed to every employee on time.
Form E (Employer Return to LHDN)
Form E is the employer's annual declaration to LHDN of all employees, their income, and PCB deducted. Submitted by 31 March each year.
Failure to submit Form E: Penalty of RM 200–RM 20,000 per offence.
Payroll software generates Form E in the format required by LHDN's e-Filing system.
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Common Malaysian Payroll Mistakes
Mistake 1: Using the wrong EPF rate for employees above 60. Many payroll managers apply the standard rate to all employees regardless of age. Employees above 60 have different contribution rates (lower for both parties). This creates overpayment that the employee cannot easily recover.
Mistake 2: Not updating PCB when employee income changes. When you give an employee a salary increment mid-year, their annual income changes and the PCB calculation must be recalculated. Many SMEs continue the old PCB deduction after a salary change, resulting in either over-deduction or under-deduction accumulated over the remaining months.
Mistake 3: Missing the SOCSO contribution for new employees. SOCSO contributions start from the first day of employment. Many businesses delay SOCSO registration for new hires, creating a gap in coverage and a retrospective contribution obligation.
Mistake 4: Not collecting TP1 from employees. Without a TP1 (tax relief declaration), you cannot apply the employee's tax reliefs in the PCB calculation. Many SMEs skip this step and over-deduct PCB — employees discover the overpayment at year-end when they file their taxes and are entitled to a refund from LHDN, but the blame often falls on the employer for the inconvenience.
Mistake 5: Incorrect treatment of allowances. Not all payments to employees are subject to EPF/SOCSO. Genuine allowances (mileage claims, hospitalisation, genuine travel reimbursements at cost) may be excluded from EPF/SOCSO contribution calculations. Incorrectly including all allowances inflates statutory contributions.
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How ERP Systems Integrate With Payroll
For Malaysian businesses using an integrated ERP like [Taskmate](/taskmate), the payroll journal (salary expense, EPF contribution expense, PCB liability, net salary payable) should flow automatically into the accounting system. This eliminates manual journal entry and ensures your P&L accurately reflects total employment cost — not just net salaries.
[AHAD Global Ventures](/services) helps Malaysian businesses implement integrated accounting and operations systems that connect payroll, HR, and financial reporting in a coherent workflow.
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Frequently Asked Questions
What are the EPF contribution rates in Malaysia for 2026? For Malaysian employees below 60: employee contributes 11%, employer contributes 13% (for monthly wages ≤ RM 5,000) or 12% (for wages > RM 5,000). For employees 60 and above: 5.5% employee and 6% employer. For non-Malaysian employees without PR: employer pays RM 5/month (flat), employee contribution is optional.
When must Malaysian employers pay EPF contributions? By the 15th of the following month. For January wages, EPF must be paid by 15 February. Late payment attracts dividends foregone and penalties. Set up automatic GIRO payment to avoid missing deadlines.
Is SOCSO compulsory for all employees in Malaysia? SOCSO is compulsory for all Malaysian employees and permanent residents employed in Malaysia and earning wages. It is not required for non-Malaysian employees without permanent residence. It also does not apply to government servants (who have PERKESO equivalent benefits through the government scheme).
How is PCB calculated in Malaysia? PCB is calculated based on the employee's annual income projection (monthly salary × 12, plus any bonuses/commissions) minus applicable tax reliefs (self-relief RM 9,000, spouse relief, child reliefs, etc. as declared by the employee). The resulting chargeable income is taxed at LHDN's progressive rates (0%–30% depending on income). The annual tax is divided by 12 for monthly PCB. Payroll software automates this calculation.
Do part-time employees in Malaysia need EPF and SOCSO contributions? Part-time employees earning wages in Malaysia are generally subject to EPF contributions if they are Malaysian citizens or PRs. SOCSO applies to employees earning below the SOCSO wage ceiling. Determine eligibility based on the employment contract nature and the regulatory thresholds. When in doubt, register — the cost of non-contribution is higher than the contribution itself.
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Read more about [how to start a business in Malaysia 2026](/blog/how-to-start-business-in-malaysia-2026), [best accounting software Malaysia 2026](/blog/best-accounting-software-malaysia-2026), or [best ERP software Malaysia SME 2026](/blog/best-erp-software-malaysia-sme-2026).