Tax Clearance Form CP21 (Malaysia)
BORANG CP21 — NOTIFICATION OF CESSATION OF EMPLOYMENT / TAX CLEARANCE
Income Tax Act 1967 (Act 53), Section 83(3) | Inland Revenue Board of Malaysia (LHDN)
Employer: [Employer Name]
LHDN Employer Reference: [Employer Tax Ref]
Employer Address: [Employer Address]
HR Contact: [HR Contact Name]
Date of Submission: [Submission Date]
PART A — EMPLOYEE DETAILS
Employee Name: [Employee Name]
NRIC / Passport No.: [Employee NRIC / Passport]
Nationality: [Employee Nationality]
LHDN Tax Reference No.: [LHDN Employee Ref]
Employment Start Date: [Employment Start Date]
Last Day of Employment: [Last Day of Employment]
Departure Date from Malaysia: [Departure Date]
Reason for Cessation: [Reason for Cessation]
PART B — FINAL REMUNERATION AND BENEFITS
Gross Salary Year-to-Date (RM): [Gross Salary YTD]
Final Month Pro-Rated Salary (RM): [Final Month Salary]
Bonus / Commission (RM): [Bonus / Commission]
Leave Encashment (RM): [Leave Encashment]
Gratuity / Compensation for Loss of Employment (RM): [Gratuity / Compensation]
Benefits-in-Kind (BIK) — Current Year (RM): [Benefits in Kind]
Total PCB Deducted Year-to-Date (RM): [PCB Deducted YTD]
Employee Bank Account (for refund): [Employee Bank Account]
Note: The employer will withhold the employee's final remuneration pending receipt of LHDN's Surat Penyelesaian Cukai (Tax Clearance Letter) as required under Section 83(3) of the Income Tax Act 1967. Releasing final pay before clearance exposes the employer to liability under Section 75 ITA 1967.
EMPLOYER DECLARATION
I, [HR Contact Name], on behalf of [Employer Name] (LHDN Employer Ref: [Employer Tax Ref]), hereby declare that the information provided in this CP21 form is true, correct, and complete to the best of our knowledge, in accordance with Section 83(3) of the Income Tax Act 1967 (Act 53).
Signature: ____________________________
Name: [HR Contact Name]
Designation: HR Manager / Payroll Officer
Date: [Submission Date]
Company Stamp: ____________________________
Employer (HR / Payroll Officer)
________________
Signature
What Is a Tax Clearance Form CP21 (Malaysia)?
A Tax Clearance Form CP21 (Malaysia) in Malaysia form CP21 in Malaysia is the statutory notification form that an employer must submit to the Inland Revenue Board of Malaysia (Lembaga Hasil Dalam Negeri, LHDN) when an employee ceases employment, leaves Malaysia permanently, or dies — under Section 83(3) of the Income Tax Act 1967 (Act 53). CP21 triggers LHDN's tax clearance process, at the end of which LHDN issues a tax clearance letter (Surat Penyelesaian Cukai) confirming the employee's outstanding tax liabilities, if any.
The employer is legally obligated under Section 83(3) of the Income Tax Act 1967 to notify LHDN at least 30 days before the employee's last day of employment or the employee's anticipated date of departure from Malaysia, whichever is earlier. Where the departure date is not known in advance — for example, in a sudden resignation — notification must be made as soon as the employer becomes aware. The employer must also withhold the employee's final salary and any other outstanding emoluments until LHDN issues the tax clearance letter, unless LHDN expressly permits early release of the final pay.
CP21 is particularly critical for non-Malaysian employees — expatriates holding Employment Passes, Professional Visits Passes, or other immigration permits — who are leaving Malaysia upon completion of their assignment or contract. LHDN requires tax clearance to confirm that all Malaysian-sourced income has been properly declared and taxed before the employee departs. Departure without tax clearance may result in the employer being assessed under Section 107A of the Income Tax Act 1967 (withholding obligations for non-resident employees) and the employee potentially being blacklisted from re-entering Malaysia under Immigration Act 1959/63.
The CP21 form requires disclosure of the employee's full name, NRIC or passport number, LHDN income tax reference number, final salary, benefits-in-kind (BIK) valued under the Income Tax (Benefits-in-Kind) Rules 2005, gratuity, compensation for loss of employment (taxable amounts under Section 13(1)(e) of the Income Tax Act 1967), and accumulated leave encashment. All of these amounts must be reported and withheld until tax clearance is granted.
Upon receiving CP21, LHDN will compute the employee's final tax liability, taking into account PCB deducted to date, tax reliefs, and any outstanding balance. LHDN aims to issue the tax clearance letter within 30 working days of CP21 receipt, though complex cases involving multiple income sources or LHDN audit reviews may take longer.
The legal framework governing the Tax Clearance Form CP21 (Malaysia) in Malaysia draws on several key statutes and regulatory bodies. Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Parties executing a Tax Clearance Form CP21 (Malaysia) in Malaysia should confirm the document reflects current law, including any amendments enacted since the original drafting date. The Employment Act 1955 (Act 265) sets the foundational requirements.
When Do You Need a Tax Clearance Form CP21 (Malaysia)?
Form CP21 in Malaysia is required whenever an employee's employment ends or their Malaysian tax residency changes in a way that affects their income tax obligations.
CP21 is required when a Malaysian employee resigns or is terminated, and the employer must settle the employee's final pay. The employer must submit CP21 to LHDN and withhold the final salary pending tax clearance under Section 83(3) of the Income Tax Act 1967. The tax clearance letter received from LHDN confirms whether there is any outstanding tax to be deducted from the final payment.
CP21 is required when an expatriate employee on an Employment Pass issued under the Immigration Act 1959/63 completes their Malaysian assignment and is returning to their home country. LHDN requires at least 30 days' notice before departure. The employer must not release the employee's final pay or repatriation allowance until LHDN issues the clearance letter.
CP21 is needed when an employee retires from the workforce. Even though retirement gratuity under Section 13(1)(e) of the Income Tax Act 1967 may qualify for exemption up to RM 1,000 per year of service (capped at the statutory maximum under the Income Tax (Exemption) Order 2009), the employer must still submit CP21 so LHDN can verify the exemption entitlement and confirm no residual tax is owed.
CP21 is required when an employee passes away during their period of employment. The employer submits CP21 to LHDN, and the deceased's estate personal representative must subsequently settle any outstanding tax liability from the estate under Section 74 of the Income Tax Act 1967.
CP21 is needed when a seconded employee or intra-company transferee leaves Malaysia to continue their assignment in another country. Partial-year Malaysian tax residency must be computed, and the employer must confirm correct PCB deductions were applied throughout the secondment period under the LHDN CP21 guidelines.
What to Include in Your Tax Clearance Form CP21 (Malaysia)
A complete and valid CP21 notification to LHDN must contain the following essential elements.
Employer Details: The employer's full legal name, SSM registration number, LHDN employer tax reference number (prefix 'E'), and address must be stated. The LHDN employer reference is used to match the CP21 against the employer's monthly PCB remittances and Form E (Employer's Annual Return).
Employee Identification: The employee's full legal name, NRIC number (for Malaysian citizens and PRs) or passport number and nationality (for foreign employees), and LHDN income tax reference number must be stated. For employees who have never filed an income tax return, the employer should advise the employee to register with LHDN before CP21 is submitted.
Employment Period: The employee's start date, last day of employment, and any notice period served must be stated. If the employee is departing Malaysia before the last working day, the departure date must also be stated, as Section 83(3) of the Income Tax Act 1967 requires 30 days' notice before either event.
Final Remuneration: The gross final salary, pro-rated salary for the last month, bonus, commission, leave encashment, and any other monetary benefits must be disclosed. Benefits-in-kind (BIK) provided during the year — such as company car, housing, and club membership — must be valued under the Income Tax (Benefits-in-Kind) Rules 2005 and included.
Gratuity and Compensation: Gratuity payments and compensation for loss of employment under Section 13(1)(e) of the Income Tax Act 1967 must be disclosed with the amounts. Tax exemption on compensation (up to RM 10,000 per year of service for genuine retrenchment under Income Tax (Exemption) Order 2007) must be calculated and the taxable portion stated.
PCB Deducted to Date: The total PCB deducted from the employee's salary in the current year of assessment must be stated. LHDN uses this figure to compute the net tax still owed or refundable after the employee's final tax is assessed.
Bank Account Details: The employee's bank account details (bank name, account number) should be provided so that LHDN can refund any overpaid PCB directly after the assessment is completed, avoiding delays in the tax clearance process.
Additional compliance elements for a Tax Clearance Form CP21 (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.
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Forms Legal. (2026). Tax Clearance Form CP21 (Malaysia) (Malaysia) [Legal document template]. Forms Legal. https://forms-legal.com/malaysia/employment/termination/tax-clearance-cp21-malaysia
"Tax Clearance Form CP21 (Malaysia) (Malaysia)." Forms Legal, 2026, https://forms-legal.com/malaysia/employment/termination/tax-clearance-cp21-malaysia.
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author = {{Forms Legal}},
title = {Tax Clearance Form CP21 (Malaysia) (Malaysia)},
year = {2026},
howpublished = {\url{https://forms-legal.com/malaysia/employment/termination/tax-clearance-cp21-malaysia}},
note = {Free legal document template. Based on Employment Act 1955 (Act 265)}
}Frequently Asked Questions
LHDN aims to process CP21 tax clearance applications and issue the Surat Penyelesaian Cukai (Tax Clearance Letter) within 30 working days of receiving the complete CP21 form and supporting documents under the LHDN service delivery standard. In practice, straightforward cases — where the employee has only employment income and regular PCB deductions — may be resolved in 10 to 14 working days. Complex cases involving multiple income sources, outstanding tax returns, unresolved audits, or foreign income may take 45 to 60 working days. Employers can track the CP21 status online through the MyTax portal (mytax.hasil.gov.my) or by calling the LHDN Hasil Care Line at 03-8911 1000. The employer is legally required to withhold the employee's final pay under Section 83(3) of the Income Tax Act 1967 (Act 53) until the clearance letter is received; releasing final pay before clearance exposes the employer to personal liability for the employee's outstanding tax under Section 75 of the Income Tax Act 1967.
CP21 and CP22A are both LHDN forms relating to employee tax compliance in Malaysia, but they serve different notification purposes. CP21 is the Notification of Employee Cessation filed by the employer under Section 83(3) of the Income Tax Act 1967 (Act 53) when an employee ceases employment, leaves Malaysia permanently, or dies — it triggers the tax clearance process and the employer must withhold final pay pending clearance. CP22A (Notification of Retirement or Cessation of Employment for a Resident Employee) serves a similar function but is specifically used for resident employees approaching retirement at age 55 or 60. CP22 (a separate form) is the employer's Notification of Commencement of Employment for new employees. Employers must maintain strict compliance with all three forms: CP22 on commencement, CP22A or CP21 on cessation. Failure to submit any of these forms attracts a penalty of RM 200 to RM 2,000 under Section 83(7) of the Income Tax Act 1967.
Yes. Under Section 83(3) of the Income Tax Act 1967 (Act 53), the employer must not release an employee's final salary, gratuity, or other terminal payments until LHDN issues the tax clearance letter (Surat Penyelesaian Cukai) in response to the CP21 notification. If the employer releases final pay before receiving tax clearance and the employee subsequently departs Malaysia with outstanding tax, the employer becomes personally liable for the outstanding tax under Section 75 of the Income Tax Act 1967 — effectively standing in the employee's shoes as far as LHDN is concerned. The only exception is where LHDN explicitly grants permission for early release of final pay — which LHDN may do informally where the employee clearly has no outstanding tax (e.g., the employee has always had PCB deducted correctly and their only income is from employment). Employers should document any such LHDN permission in writing.
Yes. CP21 is required for all employees — both Malaysian citizens and foreign nationals — when they cease employment in Malaysia under Section 83(3) of the Income Tax Act 1967 (Act 53). For Malaysian citizens and permanent residents who are not leaving Malaysia, the practical urgency is lower since LHDN can pursue them domestically if there is outstanding tax. However, the legal obligation on the employer to submit CP21 and withhold final pay still applies. In practice, many Malaysian employers and their HR departments prioritise CP21 for expatriate employees (who are departing Malaysia) and for employees with complex tax positions. For straightforward Malaysian employee resignations where PCB has been correctly deducted throughout the year, LHDN typically issues a nil-outstanding tax clearance quickly. Employers who consistently fail to file CP21 face penalties of RM 200 to RM 2,000 per instance under Section 83(7) of the Income Tax Act 1967.
When submitting Form CP21 to LHDN in Malaysia, the employer should attach the following supporting documents to facilitate quick processing. First, a copy of the employee's latest salary slip or payroll summary showing gross remuneration and PCB deducted year-to-date. Second, a letter of resignation or termination letter confirming the last day of employment. Third, for expatriate employees, a copy of the employment pass or work permit, along with flight ticket or confirmed departure date. Fourth, details of any gratuity, compensation for loss of employment, or ex-gratia payment, with the calculation of the exempt portion under the Income Tax (Exemption) Order. Fifth, the employee's Form EA (Employer's Statement of Remuneration and PCB) for the current year, even if the year has not ended. Sixth, any declaration from the employee on their Form TP1 (income tax relief declaration) or CP34 (PCB category). Submission is made to the LHDN branch that handles the employer's employer tax file (prefixed 'E').
This template is provided for informational purposes only and does not constitute legal advice. Laws vary by jurisdiction and change over time. Consult a qualified attorney for advice specific to your situation.Full disclaimer
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