Every year, employers in Malaysia are required to prepare the EA Form for their employees. This form is essential for employees to file their personal income tax (e-Filing) accurately and on time.
Let’s walk through what an EA Form is, how to prepare it step by step, and how you can simplify the process effortlessly.
A) What Is an EA Form?
The EA Form (Borang EA) is an important document issued by employers in Malaysia at the end of each year. It serves as a yearly statement of remuneration, summarising everything an employee has earned and the deductions applied during the financial year.
Think of it as a comprehensive report that helps employees complete their individual income tax declaration with LHDN. Without an accurate EA Form, employees may struggle to file taxes correctly, which could lead to delays, penalties, or unnecessary queries from the tax authorities.
An EA Form typically includes:
- Employment income: This covers the employee’s base salary and wages earned throughout the year.
- Allowances and benefits: Housing allowances, transport allowances, meal allowances, or other perks are included if taxable.
- Bonuses and commissions: Performance-related pay and sales commissions that form part of taxable income.
- Statutory deductions: Contributions to EPF, SOCSO, and EIS are recorded.
- Benefits-in-kind (BIK): If the employee receives non-cash benefits, such as a company car, phone, or accommodation, these are reported.
By consolidating all relevant remuneration and deductions into one document, the EA Form ensures employees have a clear and accurate summary of their taxable income for the year.
B) Who Needs to Receive an EA Form?
Employers are legally required to issue EA Forms to:
- All employees who received income during the year, regardless of the amount.
- Full-time, part-time, contract, and resigned employees — even if the employment period was short.
- Employees with taxable benefits or allowances, such as company cars, phone allowances, or housing perks.
Deadline: Employers must provide EA Forms to employees by the end of February of the following year. Meeting this deadline is important, as employees rely on this form to complete their annual tax submissions.
C) Information Needed to Prepare an EA Form
Accurate payroll data is critical when preparing EA Forms. Missing or incorrect information can lead to discrepancies during tax filing, potentially triggering audits or penalties. Here’s a detailed breakdown of what you need:
1. Employer Details
Before anything else, your EA Form must contain correct company information:
- Company name and official registration
- Company address
- Employer tax reference number (TRN)
This ensures that LHDN can correctly associate the form with your business and track submissions.
2. Employee Details
Next, verify employee information:
- Full name (as per IC or passport)
- NRIC or passport number
- Employee tax reference number (if applicable)
- Employment period during the year (start and end dates, if the employee resigned mid-year)
Accurate employee details prevent errors in tax processing and ensure that LHDN records match what is submitted.
3. Income Details
All forms of remuneration need to be reported:
- Basic salary and wages
- Overtime payments
- Allowances (housing, transport, meals, etc.)
- Bonus or commission payments
- Director’s fees, if applicable
It’s essential to capture each type of income correctly, as these will be used to calculate taxable income and PCB adjustments.
Accuracy is extremely important — any mismatch can cause issues during employees’ tax submission.
Step-by-Step: How to Create an EA Form Manually
Step 1: Compile Annual Payroll Data
Gather all payroll records from January to December, ensuring all figures are finalised and reconciled.
Step 2: Calculate Total Remuneration
Add up all taxable income components, including bonuses and commissions paid within the year.
Step 3: Verify EPF Contributions
Ensure the employee EPF amount reported matches EPF records and payroll summaries.
Step 4: Fill in the EA Form & Distribute
Input all information carefully into the official EA Form format. After verifying all the information, distribute the EA forms to the employees.
As you can see, manual preparation is time-consuming and prone to human error, especially if you manage many employees.
Why Accuracy Matters
Issuing accurate EA Forms builds trust with your employees. Employees rely on these forms to file their annual taxes confidently. Mistakes can create frustration, increase HR and accounting workload, and even result in penalties from LHDN for late or incorrect submissions.
Using an integrated payroll system, like Million Payroll, ensures that EA Forms are generated accurately and automatically. Payroll data, including allowances, overtime, bonuses, EPF contributions, and BIK, flows directly into the EA Form, eliminating manual entry errors and saving time.
Benefits of Using Payroll Software for EA Forms
Using payroll software to generate EA Forms offers significant advantages for employers. Instead of manually compiling spreadsheets and cross-checking numbers, automation streamlines the entire process:
- Time-saving: Traditional manual preparation of EA Forms can take days, especially for businesses with dozens or hundreds of employees. Payroll software can generate all forms in minutes, instantly consolidating annual payroll data. This means HR and finance teams can focus on more strategic tasks rather than tedious calculations.
- Error-free calculations: Payroll systems automatically include all income components—basic salary, allowances, overtime, bonuses, and commissions. EPF, SOCSO, and EIS deductions are applied correctly according to LHDN rules. Automation eliminates human errors that can occur when manually totaling figures or copying data into forms.
- Compliance assurance: LHDN regularly updates tax regulations and reporting requirements. Payroll software is designed to follow these updates, ensuring that all EA Forms comply with the official format and contain accurate figures. Businesses can avoid late submissions, penalties, or compliance issues.
- Audit readiness: All historical EA Forms and payroll data are stored securely within the software. This makes it easy to retrieve past records during internal audits or in response to LHDN inquiries. Employers no longer need to sift through physical files or spreadsheets to prove compliance.
Example: A medium-sized consultancy firm with 50 employees previously spent a week generating EA Forms manually. After implementing payroll software, they now generate all forms in under 10 minutes—freeing their HR team for planning and employee engagement activities.
2. Handling Special Cases
While payroll software simplifies EA Form preparation, certain situations require extra attention to ensure accuracy:
- Employees who joined mid-year: New employees should only have their income and deductions reported for the period they were employed. Payroll software can automatically calculate partial-year earnings and prorate allowances, so the EA Form reflects the correct taxable income.
- Employees who resigned during the year: Income and deductions should be reported up to the last working day. This ensures LHDN receives a complete record and employees can file their taxes correctly. Payroll systems help track final settlements, unpaid leave deductions, and last-month bonuses automatically.
- Overseas employees or expatriates: For employees who work partially in Malaysia or overseas, taxable income needs to follow Malaysian tax rules. Payroll software can handle complex calculations, ensuring that allowances, foreign income, or tax-exempt items are correctly applied.
- Employees with multiple income sources within the company: Some employees may receive both a base salary and additional payments from other company divisions or projects. Automated systems consolidate all these earnings, including benefits-in-kind and allowances, to produce a single, accurate EA Form.
Tip: Employers should always review special cases to ensure that payroll software reflects unique arrangements, preventing discrepancies in EA Form reporting.
3. Integrating EA Form Generation with PCB and E-Invoicing
Modern payroll and accounting systems can do more than generate EA Forms—they can integrate employee tax (PCB) and accounting e-invoicing, creating a seamless, end-to-end financial workflow.
- Consistent and accurate financial records: By integrating payroll and accounting data, businesses ensure that employee wages, allowances, and deductions align with accounting entries and invoices. This reduces mismatched records, ensuring reporting accuracy across the board.
- Simplified reporting for LHDN compliance: Instead of preparing separate reports for PCB, EA Forms, and invoices, integrated systems automatically consolidate data. This minimizes manual reconciliation, reduces errors, and saves time during regulatory reporting periods.
- Streamlined workflow: Finance and HR teams no longer have to cross-check spreadsheets or manually enter data multiple times. Automated workflows allow for one-touch generation of EA Forms and PCB calculations while keeping accounting records aligned with invoicing.
Businesses that adopt a fully integrated system gain real-time visibility into both employee taxes and overall business finances. This allows management to make informed decisions on cash flow, budgeting, and workforce planning.
Example: A retail chain integrating payroll, PCB, and e-invoicing can see total salary expenses, taxes withheld, and outstanding client invoices in one dashboard, improving both efficiency and financial transparency
Therefore, why not simplify EA Form Generation with Million Payroll?
Instead of manually compiling and calculating everything, Million Payroll helps you generate EA Forms accurately and instantly.
With Million, you can:
- Automatically consolidate yearly payroll data
- Ensure EPF and income figures are consistent
- Generate EA Forms for all employees with just one click
- Easily re-generate EA Forms if revisions are needed.
No spreadsheets. No manual calculations. No stress.
Creating EA Forms is a statutory requirement, but it doesn’t have to be complicated or time-consuming. Let Million handle your EA Forms — generated accurately with one click. Focus less on paperwork, and more on what matters.
Final Thoughts
Creating EA Forms is a statutory requirement, but it doesn’t have to be complicated. Using modern payroll software like Million Payroll, you can generate EA Forms accurately and instantly, reduce manual work, and maintain compliance with LHDN.
By integrating EA Form generation with PCB calculation and accounting e-invoicing, businesses can:
- Ensure accuracy across all payroll and accounting processes
- Save time and reduce administrative burden
- Maintain trust and transparency with employees
- Stay fully compliant with Malaysian tax regulations
Focus less on paperwork and more on growing your business — let technology handle EA Form generation efficiently and accurately.
