KUALA LUMPUR: Reacting to criticism from employers, the Malaysian government has reversed itself by suspending for at least a year a new policy requiring businesses that hire millions of migrants to be taxed for each foreigner on their payrolls.
The policy of imposing an annual levy on businesses – which used to be deducted from migrants monthly salaries – was only 10 days old before the government decided to go back to the old policy temporarily.
Cabinet members on Wednesday decided to postpone the policy until Jan. 1, 2018, after receiving complaints from business owners and employers the previous day. The decision means that foreign workers will still have to pay the tax for now.
“The cabinet had a thorough discussion on the matter. Paul Low [minister in the Prime Minister’s Department] had an engagement session with stakeholders on Tuesday and presented the outcome at the cabinet meeting,” Transport Minister Liow Tiong Lai told The Star. “Taking into consideration the views of the stakeholders, we have found it wise to delay the implementation of the levy payment by employers.”
Malaysia’s Director General of Immigration, Mustafar Ali, confirmed the decision but declined to give details. “The levy under the EMC has been postponed to 2018,” he told BenarNews.
The new Employer Mandatory Commitment (EMC), as the levy is known, would have required businesses to bear the annual levy for each foreign worker in their employ – 1,850 ringgit (U.S. $413) per worker in category one (manufacturing, construction and service industries) and 640 ringgit ($143) per worker in category two (plantation and agriculture).
The government expected to gain 2.5 billion ringgit ($558 million) from the levy each year under the new rule, according to Home Minister and Deputy Prime Minister Ahmad Zahid Hamidi.
Announcing the EMC on Dec. 31, Zahid said the move would require employers to ensure that their hired foreign workers did not abscond, change sectors, overstay their visits or become illegal immigrants.
