# Tax Clearance: CP21, CP22A and the 90-Day Rule

> What an employer must do when an employee leaves or leaves Malaysia — the CP21 and CP22A notifications, the s.83(5) duty to withhold final pay for 90 days, and the liability that follows if the money goes out early.

- Category: taxation
- Language: en
- Status: published
- Updated: 2026-07-20
- Canonical: https://negaraku.md/en/taxation/tax-clearance

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Payroll teams treat tax clearance as a form. It is not a form — it is a
**withholding duty with a liability attached**, and the liability is not the
employee's.

Section 83(5) of the Income Tax Act 1967 says that where an employer holds any
money payable to an employee who has ceased or is about to cease employment, or
who is about to leave Malaysia for more than three months with no intention of
returning, the employer **shall not, without the permission of the Director
General, pay any part of those moneys** until **ninety days** after LHDN
receives the required notification. And if LHDN directs, the employer must pay
the money over towards the employee's tax instead.

The consequence is the part that gets misdescribed. **Section 107(4)** provides
that an employer who fails to comply with s.83(2), (3), (4) or (5) shall be
liable **to pay the full amount of tax due from the employee**, and that the
amount **shall be a debt due from that employer to the Government and shall be
payable forthwith**. LHDN says the same on its employer page in Malay —
*"Majikan bertanggungjawab untuk membayar amaun penuh cukai yang kena dibayar
oleh pekerjanya"* — and names s.106 civil recovery as the mechanism.

Two clarifications that most write-ups get loose. It is a liability of **the
employer**, not personal liability of a director or an HR manager. And it is not
final: the proviso to s.107(4) lets the employer **recover the amount from the
employee as a debt**. What you lose is the money you already paid out and the
leverage you had while you were holding it.

## The three forms, and the 30 days

| Event | Form | Deadline | Statute |
| --- | --- | --- | --- |
| Employee ceases employment (private sector) | **CP22A** | **not less than 30 days before** cessation | s.83(3) |
| Employee ceases employment (public sector) | **CP22B** | as above | s.83(3) |
| Employee dies in service | CP22A / CP22B | **not more than 30 days after** being informed of the death | s.83(3) |
| Employee leaves Malaysia for **more than 3 months** | **CP21** | **not less than 30 days before** the expected departure date | s.83(4) |
| New employee who is or may be chargeable | CP22 | within **30 days** of commencement | s.83(2) |

Both provisos matter. Under s.83(3) the Director General **may accept** a late
notice, or one given on or after cessation, where he is satisfied it is
reasonable in the circumstances — so a late CP22A is a concession, not a right.
Under s.83(4)(b) he may **waive** the CP21 requirement entirely for an employee
who has to leave Malaysia at frequent intervals in the course of the job, which
is the answer for regional roles that would otherwise generate a CP21 a month.

Since **1 January 2024** all three departure forms are mandatory online through
**e-SPC** on the MyTax portal. CP22A and CP22B accept either a web form or a
batch `.txt` upload capped at 3 MB; CP21 is web form only. Cancellations still
have to be lodged at an LHDN office — e-SPC handles original, amended and
supplementary applications only.

## The exemption most employers miss

The default assumption in Malaysian HR is that every leaver needs a CP22A. The
guideline says the opposite for the ordinary case. **GPHDN 2/2024 para 3.2**
removes the notification requirement where:

- the employment income is **not chargeable to tax**;
- the employee is a **Malaysian citizen** whose monthly income was **below the
  PCB threshold** and who receives **no gratuity or compensation** on cessation;
- the employee is a **Malaysian citizen** whose income **was subject to PCB**
  under the Income Tax (Deduction from Remuneration) Rules 1994 and who receives
  **no gratuity or compensation**;
- the employee is a **non-citizen** meeting either of those two tests **and
  continuing to work in Malaysia**; or
- the employee receives a retirement gratuity or benefit but **does not actually
  retire** and stays with the same employer.

That third limb covers most resignations from a salaried job. The trigger back
into the regime is the **gratuity or compensation** — an ex-gratia payment, a
termination package or a retirement benefit puts the leaver straight back into
CP22A territory even though PCB was deducted all along.

Note what the exemption does *not* do. It removes the **notification**. Where a
notification is required, the s.83(5) withholding follows it, and LHDN's own
employer page frames the withholding as applying to employees **not** covered by
the exemption.

## The 90 days, and what actually releases the money

The 90 days runs from **LHDN's receipt** of the CP21, CP22A or CP22B — not from
the last day of work, and not from the date you filed. Three things can end it
early or redirect it:

- LHDN gives **permission** to release (s.83(5) is expressed as a prohibition
  *without the permission of the Director General*);
- LHDN **directs** the employer to pay all or part of the money towards the
  employee's tax, which the employer must then do; or
- the **SPC is issued**, confirming the position and any amount claimed.

The SPC goes to the **employer**, copied to the employee, and its status is
visible in e-SPC. LHDN will not process it until the employee's own house is in
order — GPHDN 2/2024 para 6.1.1 lists complete forms and supporting documents,
returns filed for the latest and all prior years of assessment, any audit for
earlier years closed, and any compound or prosecution case settled.

## What the employee has to do

The employee's duty is the return position, and it splits on whether **PCB as
final tax (PCBCM)** was elected:

| Situation | Current YA return | Return for the year employment ends |
| --- | --- | --- |
| Ceasing employment, **elected** PCBCM | not required | required, filed the following year |
| Ceasing employment, **not eligible** or did not elect | required | required, filed the following year |
| Leaving Malaysia, **elected** PCBCM | not required | required |
| Leaving Malaysia, **not eligible** or did not elect | required | required |

Where LHDN has not yet released the return form for the current year of
assessment, the guideline's own workaround is to use the previous year's form
and strike out the year — para 4.3.3, with a worked example.

Two conditions travel with this. Tax already assessed and due **must be paid**,
even where the assessment is under appeal — which is the same rule as
[appealing an assessment](/en/taxation/tax-appeal), applied at the worst
possible moment in an employee's cash flow. And if the amount claimed in the SPC
goes unpaid, LHDN may issue a **s.104 certificate** to the police or Immigration
to prevent departure; leaving anyway is an offence under s.115(1).

## What non-compliance costs

| Failure | Consequence |
| --- | --- |
| No CP22A / CP22B / CP21, without reasonable excuse | Offence under **s.120(1)**: fine **RM200 to RM20,000**, or up to **6 months**, or both |
| Releasing the money inside the 90 days | **s.107(4)** — employer liable for the **full amount of tax due from the employee**, a debt to the Government payable forthwith, recoverable by civil suit under s.106 |
| Failure to deduct PCB as directed | s.107(4) — employer liable for the **tax not deducted** |

Both limbs can run at once, and the s.107(4) liability is not a penalty capped
at RM20,000 — it is the employee's whole tax bill.

One drafting point worth knowing. **Section 120(1)(c) on its face covers failure
to give the notices under s.83(2), (3) and (4)** — it does not list s.83(5).
LHDN's guideline and its employer page both apply s.120(1) to a breach of the
withholding duty as well. The real exposure on s.83(5) is s.107(4), which is
larger anyway.

## Common mistakes

**Filing a CP22A for every leaver.** For a citizen whose pay ran through PCB and
who gets no gratuity or compensation, GPHDN 2/2024 para 3.2 says no notification
is needed. Filing anyway starts a 90-day hold you did not have to impose.

**Skipping the CP22A because PCB was deducted — when a package is paid.** The
exemption is conditional on there being **no gratuity or compensation**. A
severance payment removes it.

**Counting the 90 days from the last day of work.** It runs from LHDN's receipt
of the form.

**Paying out the final salary on the normal payroll run.** That is the breach
that engages s.107(4). Hold it, or get written permission.

**Treating the CP21 as an expatriate-only form.** It applies to any employee
chargeable to tax who is leaving Malaysia for more than three months — including
Malaysians going on a long overseas posting or secondment.

**Assuming the employer eats the loss.** It does not have to: the proviso to
s.107(4) gives a statutory right to recover the amount from the employee as a
debt. Collecting it from someone who has already emigrated is the practical
problem, which is exactly why the withholding exists.

## What's next

If a resignation has landed, run the para 3.2 test first — citizen, PCB, no
gratuity or compensation — and only open e-SPC if the answer puts you inside the
regime.

If you are inside it, file the CP21 or CP22A at least 30 days out, ring-fence
the final payment in payroll on the day the form is submitted, and diary the 90
days from LHDN's acknowledgement rather than from the leaving date.

For the rest of the exit checklist — EPF and SOCSO cessation, final pay timing,
work-pass cancellation — see
[the offboarding statutory checklist](/en/employment/offboarding-statutory-checklist).

## Sources

- Garis Panduan Operasi Bil. 2 Tahun 2024 — Prosedur Permohonan Surat Penyelesaian Cukai (SPC) Individu, amended edition — https://www.hasil.gov.my/wp-content/uploads/20251101_garis-panduan-operasi-bil-2-tahun-2024-prosedur-permohonan-spc-individu.pdf (LHDN)
- Pemberitahuan Pemberhentian Kerja — employer notification page — https://www.hasil.gov.my/majikan/pemberitahuan-pemberhentian-kerja/ (LHDN)
- Income Tax Act 1967 (Act 53), reprint as at 21 May 2024 — ss.83, 104, 107, 115 and 120 — https://www.hasil.gov.my/wp-content/uploads/20240521-akta-cukai-pendapatan-1967-akta-53.pdf (LHDN)
- Garis Panduan (guidelines index, listing GPHDN 2/2024 original 1 April 2024 and amendment 1 November 2025) — https://www.hasil.gov.my/perundangan/garis-panduan/ (LHDN)
- Kesalahan, Denda dan Penalti — https://www.hasil.gov.my/perundangan/kesalahan-denda-dan-penalti/ (LHDN)

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