Quick answer: An employer in a covered sector with 10 or more Malaysian employees must register with HRD Corp and pay a levy of 1% of monthly wages. Employers with 5 to 9 Malaysian employees may register optionally at 0.5%. The levy is due by the 15th of each month and cannot be deducted from employees' wages. Registered employers can claim training costs after getting grant approval before the training.
- Mandatory: 10 or more Malaysian employees in a covered sector, 1% levy.
- Optional: 5 to 9 Malaysian employees, 0.5% levy.
- Levy is due by the 15th of each month.
- Apply for grant approval before training, then claim.
- Failing to register or pay carries fines and possible imprisonment.
Who Registers
| Employer | Position |
|---|---|
| 10 or more Malaysian employees, covered sector | Must register. Levy 1% |
| 5 to 9 Malaysian employees | May register. Levy 0.5% |
| Federal and State Government, statutory bodies | Excluded |
| Eligibility | Decided by HRD Corp. Registration is free |
Who Is Counted and How the Levy Is Calculated
HRD Corp counts Malaysian citizens employed under a contract of service. Domestic servants are excluded. A director is counted only if paid a salary, and directors paid fees only are not counted. The levy is calculated on total wages, meaning basic salary plus fixed allowances, and is paid by the employer, not deducted from employees.
Claims
Apply before training
Get grant approval before sending employees to training.
Attend the training
Keep the records the scheme requires.
Submit the claim
Reimbursement is the lower of the approved amount and actual expenses.
Receive payment
Paid to the employer or the training provider, depending on the scheme.
Penalties and Deregistration
| Item | Rule |
|---|---|
| Not registering when required | Fine up to RM10,000, up to one year's imprisonment, or both |
| Late or missed levy | Fine up to RM20,000, up to two years' imprisonment, or both, plus 10% yearly interest per day of delay |
| No response within 30 days | HRD Corp may compound up to RM2,000 |
| Deregistration | Allowed if the business changes to a non-covered activity or has fewer than 10 Malaysian employees for three consecutive months. Apply within 30 days after ceasing operations |
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Mistakes
Counting foreign employees
Only Malaysian citizens are counted.
Training first, approval later
Approval comes before training.
Deducting the levy from wages
The employer must bear it.
How We Help
What we handle for you
Accounts and filings
- Keep your accounting records and prepare year-end financial statements.
- Help with the tax and statutory filings that follow from your accounts.
Payroll
- Run payroll and prepare the monthly and yearly payroll filings.
Why companies choose us
Accounting, payroll and company set-up under one roof
- We also handle company incorporation and expatriate pass applications, so your accounts, payroll and structure stay aligned.
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- Neutral Consulting PLT is led by a Managing Partner who is a member of the Malaysian Institute of Accountants.
Frequently Asked Questions
Quick answers.
Who must register with HRD Corp?
Employers in covered sectors with 10 or more Malaysian employees.
Can smaller employers register?
Employers with 5 to 9 Malaysian employees may register optionally.
What is the levy rate?
1% for mandatory employers and 0.5% for optional employers.
What is the levy based on?
Total wages, being basic salary plus fixed allowances.
When is the levy due?
By the 15th of each month.
Are foreign employees counted?
No. HRD Corp counts Malaysian citizens.
Is a director counted?
Only if paid a salary. Directors paid fees only are not counted.
Can I deduct the levy from wages?
No.
How do I claim training costs?
Apply for grant approval first, then claim after training. Reimbursement is the lower of approved and actual amounts.
What is the penalty for not registering?
A fine up to RM10,000, up to one year's imprisonment, or both.
What is the penalty for late levy?
A fine up to RM20,000, up to two years' imprisonment, or both, plus 10% yearly interest.
Can we deregister?
Only in the cases HRD Corp allows, such as fewer than 10 Malaysian employees for three consecutive months.
Sources
Official sources
This page is general information, not legal advice. Agencies change their requirements, so confirm the current rules with LHDN, the Royal Malaysian Customs Department and SSM, or with us, before you act. Checked November 2026.
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