Mandatory EPF Contributions for Non-Malaysian Citizen Employees Effective October 2025

The mandatory EPF contribution policy is designed to promote greater equity between Malaysian and non-Malaysian employees by ensuring equal treatment for all workers in Malaysia. This initiative aligns with international social security standards and reflects the Government’s commitment to inclusive and fair labour practices.

Effective October 2025, employers will be legally required to contribute to the EPF for all non-Malaysian citizen employees, excluding domestic workers, who:

• Hold a valid passport; 
• Possess a valid employment-related pass issued by the Immigration Department of Malaysia, permitting employment in Malaysia; and
• Receive wages in monetary form.

Applicable Pass Types

Mandatory EPF contributions apply to employees holding the following pass types, subject to prior immigration approval where required:

• Visitor’s Pass (Temporary Employment, excluding Domestic Helpers)
• Employment Pass
• Professional Visit Pass
• Student Pass
• Residence Pass
• Long-Term Social Visit Pass

Note: For holders of the Professional Visit Pass (Specialised), Student Pass, Residence Pass, and Long-Term Social Visit Pass, work permission must be obtained in advance from the Immigration Department.

Employer Responsibilities

Employers must:

• Register eligible non-Malaysian citizen employees with the EPF.
• Remit both employer and employee contributions in accordance with statutory requirements.

Exemption for Domestic Workers

Employers hiring domestic servants are exempt from mandatory EPF contributions. However, voluntary contributions may be made.

Note: Under Section 3 of the Workmen's Compensation Act 1952, domestic servants include roles such as:

• Maid
• Cook
• Gardener
• Cleaner
• Babysitter
• Driver
• And similar occupations

EPF Registration Methods for Employers

Employers may register with the EPF using one of the following methods:

1. Online Registration
   Companies incorporated under the Companies Commission of Malaysia (SSM), excluding Limited Liability Partnerships (LLPs), may complete the registration process online via the official EPF website. Please note that online registration is subject to specific terms and conditions as prescribed by the EPF.
2. In-Person Registration
   Employers may also opt to register by visiting any EPF branch. This method is available to all employer categories, particularly those not eligible for online registration.

Note: Employers are not required to submit a new registration and may continue using their existing EPF employer reference number.

Registration of Non-Malaysian Citizen Employees

For non-Malaysian citizen employees, excluding those employed in the domestic sector, the EPF will introduce an enhanced automatic registration mechanism that eliminates the need for employers to visit an EPF office in person. Further updates and implementation details regarding this initiative will be provided by the EPF in due course.

In specific or exceptional cases where automatic registration is not feasible, employers may proceed with manual registration at any EPF branch.

For non-Malaysian citizen employees in the domestic sector, voluntary registration and contribution may be initiated at any nearby EPF office. Under this arrangement, effective from salaries paid in October 2025, both the employer and the employee will contribute at a rate of 2% each.

Verification of Registration Status

The registration status of non-Malaysian citizen employees can be verified through the following channels:

1. By employers via the i-Akaun (Employer) portal; or
2. By employees (members) at any EPF branch office.

1. From the Employee's Perspective:
   

   Tax Aspect	Status
   The 2% EPF contribution made by a non-Malaysian citizen employee is eligible for personal tax relief, subject to a maximum claim of RM4,000 per year.	✅  Eligible for Tax Relief
   Employer’s 2% contribution is not taxable to the employee	✅  No Tax Impact
   Withdrawal upon leaving Malaysia is not taxable	✅  No Tax Impact

   
   
2. From the Employer’s Perspective:
   

   Tax Aspect	Status
   2% EPF contribution is deductible as a business expense under Section 33(1) of the Malaysian Income Tax Act 1967 (“MITA”), as it is incurred wholly and exclusively in producing gross income.	✅  Deductible as a business expense
   Any delay in the remittance of EPF contributions may result in the employee being temporarily ineligible to claim individual income tax relief on such contributions until the employer has settled the outstanding amount.	🚨  Compliance Alert
   Employer’s EPF contributions are tax-deductible up to a maximum of 19% of the employee’s total remuneration. Contributions exceeding this threshold are not deductible, potentially increasing the company’s taxable income and tax expense.  Employers should ensure contribution rates remain within the allowable limit to maximise tax efficiency.	🚨  Compliance Alert

As outlined in the preceding section, the upcoming requirement for mandatory EPF contributions for non-Malaysian citizen employees is aimed at promoting fair labour practices and strengthening social protection. However, employers should be aware of two critical compliance risks:

1. Hiring Foreign Individuals Without Valid Work Passes

   
   Employing foreign individuals without a valid employment-related pass issued by the Immigration Department of Malaysia constitutes a serious offence under Malaysian law. These individuals are not eligible for EPF registration, and employers may face:
   • Legal penalties from various authorities
   • Immigration enforcement actions
   • Reputational damage
   
   ⚠️Important: The mandatory 2% EPF contribution is not intended to legitimise undocumented employment.
   
   💡 Tip: Employers must ensure that all foreign individuals possess valid immigration passes prior to onboarding, initiating payroll processes or allowing them to commence any work with the Company. Employment and payroll activities must be undertaken strictly within the validity period of the respective immigration passes.

2. Misclassifying Employees as Independent Contractors

   
   Some employers may consider treating foreign individuals as independent service providers to avoid EPF obligations. However, under Malaysian labour and tax law, the substance of the working relationship takes precedence over formal contractual terms. Where a foreign individual works under the direction of the employer, during fixed hours, and with the use of company resources, there is a risk that authorities may reclassify the individual as an employee.
   
   Potential consequences include:
   • Retrospective EPF contributions may be subject to penalties for non-compliance.
   • Increased exposure to MIRB payroll tax audits.
   • Disallowance of related business expense deductions.
   • Potential criminal or administrative sanctions.
   ⚠️ Key Message: Misclassification does not eliminate employer obligations—it increases compliance risk.

The above comments are provided from a general advisory perspective. Employers are encouraged to carefully assess their current arrangements involving foreign individuals to ensure accurate classification and adequate documentation in advance of the October 2025 effective date.

Each situation should be evaluated on its own merits, based on the specific facts and circumstances. Where uncertainty arises, professional advice should be sought to mitigate compliance risks.

At Crowe, our dedicated and experienced professionals in the Global Mobility Services (GMS) team are ready to support your business through the upcoming EPF policy changes affecting non-Malaysian citizen employees. We offer end-to-end assistance tailored to your organisation’s needs, including:

• EPF Registration Support
  Step-by-step guidance for registering non-Malaysian citizen employees, including assistance with i-Akaun setup and coordination with EPF offices where necessary.
• Payroll System Updates & Compliance Reviews
  Ensuring accurate application of EPF contribution rates in line with statutory requirements through system updates and compliance checks.
• Strategic Tax Advisory
  Expert analysis of cost implications and guidance on tax-efficient remuneration structures for both employers and employees.
• Audit Support
  Assistance during MIRB or EPF audits, including documentation preparation and professional representation to manage compliance risks.

Our team brings deep technical expertise in payroll, taxation, and statutory compliance to help you navigate this transition with confidence and efficiency.

For a readiness consultation or further assistance, please contact the Crowe GMS team.

References
1. https://www.kwsp.gov.my/en/w/list-news/epf-expands-mandatory-contribution-to-non-malaysians
2. https://www.kwsp.gov.my/en/employer/responsibilities/non-malaysian-citizen-employees