What is PCB and how does it affect payroll bookkeeping?
PCB (Potongan Cukai Bulanan) is the monthly income tax that an employer deducts from an employee's salary and pays to LHDN on the employee's behalf. In the books it is a liability held until paid, not an expense of the company.
PCB is the Monthly Tax Deduction scheme. Instead of employees paying all their tax at year end, the employer withholds an amount from each salary, based on LHDN's calculation schedule and information the employee provides.
Bookkeeping treatment
- Gross salary is the expense
- The PCB amount is deducted from the employee's pay and recorded as PCB payable (a liability to LHDN)
- When the company remits to LHDN, the payable is cleared
- It is not a cost to the company, unless the company chooses to bear it for the employee
Routine
- Calculate PCB with LHDN's schedule or a compliant payroll tool
- Pay LHDN on or before the 15th day of the following month, and submit the data through e-PCB, e-Data PCB or e-CP39
- Issue Form EA to employees after year end and file the employer's annual return
- Keep the payroll records and the employees' Form TP1 if provided
Why it matters
- Under-deducting can leave the employer responsible
- Late payment can bring penalties
Rates, tax relief inputs and the filing detail are tax topics, so use the tax section or a tax adviser for specific questions.
Legal basis
- Income Tax Act 1967, s.107
- Income Tax Rules 1994 (Schedular tax deductions)
Sources
Applies to 2026 · Last reviewed 29 October 2026
General information for business owners, not legal, tax or professional advice. Rules change, so check the sources or ask a licensed professional before you act.
Related questions
- How long must a Malaysian company keep its accounting records?A company must keep accounting records for seven years after the transactions they record were completed. For tax, documents must be kept for seven years from the end of the relevant year of assessment. Use whichever period ends later.
- How soon must transactions be recorded in the books?Under section 245 of the Companies Act 2016, entries must be made in the accounting records within 60 days after the transaction is completed. Leaving the books for a full year-end rush is therefore not compliant.
- What do a company's financial statements contain?A company's financial statements normally include a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity, a statement of cash flows and notes with accounting policies. The set must give a true and fair view.
- Who prepares and approves a company's financial statements?Directors are legally responsible for the financial statements. An in-house accountant or external firm often drafts them, but the board approves them by resolution and signs a directors' statement. The statements are then presented to the members.
- What is the difference between MPERS and MFRS?MFRS is the full set of Malaysian standards, aligned with IFRS, used by listed and regulated entities. MPERS is a shorter, simplified framework based on the IFRS for SMEs standard, designed for private entities. Both give a true and fair view; MPERS has fewer disclosures and simpler rules.