Are Retrenchment (lay-off) Benefits Subject to Statutory Deduction (in Malaysia context)?
Retrenchment benefits received by any employee are taxable under Malaysian income tax law. However, certain tax exemption is granted for such benefits received. Tax exemption granted is restricted to RM6,000 for each completed year of service with the same employer, or with companies in the same group. Under Mini Budget Year 2009, tax exemption has been increased to RM10,000 for each completed year of service.
Retrenchment benefits, however, is not subject to EPF and SOCSO contribution.
