Self-Employed in Malaysia: Income Tax (Form B), SOCSO (SKSPS) and EPF i-Saraan Explained

If you're self-employed in Malaysia (freelancer, e-hailing driver, online seller, hawker or contractor), nobody deducts EPF, SOCSO or PCB from your income. You declare your own income tax on Form B, register for PERKESO's SKSPS (Self-Employment Social Security Scheme) at a fixed monthly amount from RM13.10, and save for retirement through EPF i-Saraan, which pays a 20% government top-up of up to RM500 a year.

This guide covers each of the three, shows how the numbers work with two worked examples, and lists the mistakes freelancers most often make.

Employee vs self-employed: what changes

When you're on a payroll, your employer handles almost everything: EPF (KWSP), SOCSO and EIS (PERKESO) and monthly tax (PCB) come off your gaji before it reaches you. You can see how that works in the salary calculator.

When you work for yourself, three things change:

• Tax: there's no PCB. You report your business profit once a year on Form B and pay the tax yourself.
• SOCSO: there's no employer share and no EIS. Instead you pay into SKSPS, a separate PERKESO scheme for the self-employed.
• EPF: there's no mandatory 11% and no employer contribution. Saving is voluntary, through i-Saraan.

Income tax: Form B and how it's calculated

Self-employed residents use Form B (business income), not Form BE. LHDN's deadlines are:

• Form B on paper: on or before 30 June
• e-B (online through MyTax): on or before 15 July
• For comparison, employees' Form BE is due 30 April (e-BE 15 May)

You're taxed on profit, not on what clients paid you. The steps are:

1. Add up your business receipts for the year (everything you invoiced and were paid).
2. Subtract allowable business expenses: costs wholly and exclusively incurred to earn that income, such as software subscriptions, a work laptop (claimed through capital allowances), materials, platform commission and the business share of your phone bill.
3. Add any other income (for example rent, or a salary from a part-time job).
4. Subtract your reliefs: RM9,000 for yourself, plus EPF, insurance, lifestyle and the others on LHDN's list.
5. Apply the resident tax rates to what's left (your chargeable income).
6. If chargeable income is RM35,000 or less, subtract the RM400 rebate.

The rate bands are the same as for employees: 0% on the first RM5,000, 1% to RM20,000, 3% to RM35,000, 6% to RM50,000, 11% to RM70,000, 19% to RM100,000, then 25% and up. Our income tax guide has the full table and more examples.

Once you have a tax bill, LHDN may also send you a CP500 notice. This asks you to pay the next year's tax in advance, in instalments, much like PCB does for employees. Plan for it so it doesn't hit your cash flow.

SOCSO for the self-employed: SKSPS (Act 789)

PERKESO's Self-Employment Social Security Scheme covers Malaysian citizens and permanent residents who work for themselves, with no age limit, in 20 sectors. These include passenger and goods/food transport (e-hailing and p-hailing), agriculture, fisheries, food, construction, hawkers, online business, IT, professional services, the arts, household services, and beauty and healthcare.

You choose one of four plans. The plan sets your "insured monthly earning", which is the base PERKESO uses to work out cash benefits if you're injured at work:

SKSPS covers work-related injury and disability: medical benefit, temporary and permanent disablement benefit, constant-attendance allowance, dependants' benefit, rehabilitation facilities, and funeral benefit. It doesn't include EIS (job-loss benefit), because there's no employer to lose a job with.

Coverage starts from the date and time your contribution is paid and recognised. It doesn't backdate to when you started working. You can register and pay through the PERKESO Prihatin app or website.

Which plan? Pick the plan whose insured earning is closest to your real monthly profit, without going over it unless you can afford the bigger contribution. A plan that's too low means much smaller benefit payments if an accident stops you working.

EPF for the self-employed: i-Saraan

i-Saraan is KWSP's voluntary contribution route for Malaysians below 60 who earn income from their own work. You pay in whenever you like, from as little as RM1, and the government adds a special incentive of 20% of what you contribute in the year, up to RM500. That means you need to contribute RM2,500 a year to get the full RM500. There's a lifetime cap of RM5,000 in incentives, or until you turn 60, whichever comes first.

You also earn the normal annual EPF dividend on the balance (see how EPF dividend is calculated). Total voluntary contributions across i-Saraan, i-Simpan and the other voluntary routes are capped at RM100,000 a year. You can register and pay through the KWSP i-Akaun app, internet banking or at an EPF office.

Tax relief: for the self-employed, LHDN allows voluntary EPF contributions as relief of up to RM4,000. Additional voluntary EPF can also count toward the separate RM3,000 limit that you'd otherwise use for life insurance or family takaful (RM7,000 combined). So EPF top-ups can cut your tax and earn the incentive at the same time.

To see what regular top-ups could grow to by retirement, try the EPF growth calculator.

Worked example 1: e-hailing driver, profit RM36,000

Aiman drives full time. After fuel, maintenance and platform commission, his profit for the year is RM36,000 (RM3,000 a month).

• SKSPS: Aiman picks Plan 3 (insured earning RM2,950, close to his RM3,000 profit): RM36.90 × 12 = RM442.80 a year.
• i-Saraan: he contributes RM2,500 across the year, and the government adds RM500 (20%).
• Tax: RM36,000 − RM9,000 (self) − RM2,500 (EPF relief) = chargeable income RM24,500.
• Tax on RM24,500 = RM150 + 3% × RM4,500 = RM285.
• Chargeable income is below RM35,000, so the RM400 rebate applies: tax payable = RM0.

Aiman would pay no tax even without the EPF relief. For him, the real win is the free RM500 in his EPF account and the injury cover from SKSPS, which together mean setting aside about RM245 a month (RM2,942.80 a year, most of it his own savings). He still has to file Form B by the deadline, even with zero tax.

Worked example 2: freelance designer, receipts RM96,000

Mei invoices clients RM96,000 in a year. Her allowable expenses (software, a share of her phone and internet, materials and capital allowance on her laptop) come to RM18,000, so her business profit is RM78,000.

She contributes RM6,000 to i-Saraan and has no life insurance policy to claim.

• EPF relief: RM4,000 for voluntary EPF, plus RM2,000 of additional voluntary EPF under the RM3,000 limit = RM6,000
• Chargeable income: RM78,000 − RM9,000 − RM6,000 = RM63,000
• Tax: RM1,500 + 11% × RM13,000 = RM1,500 + RM1,430 = RM2,930

Without the EPF top-up, her chargeable income would be RM69,000, and the tax RM1,500 + 11% × RM19,000 = RM3,590. So her RM6,000 contribution:

• cuts her tax by RM660
• earns the maximum i-Saraan incentive of RM500 (20% of RM6,000 is RM1,200, capped at RM500)

That's RM1,160 of benefit on RM6,000 saved, before any dividend.

If you invoice clients like Mei, keep every invoice and receipt. They're your proof of receipts and expenses if LHDN asks. The KiraBoss invoice generator and our guide on what freelancers should include on an invoice can help.

Common mistakes

• Declaring revenue instead of profit, or profit without records. You're taxed on profit, but only expenses you can prove count. Keep receipts and invoices for years, not months: LHDN can ask for them after you file.
• Using Form BE. If you have business income, it's Form B, with a later deadline (30 June, or 15 July online).
• Thinking "no PCB" means no tax. The tax is still due. It's just paid in one go (or through CP500 instalments) instead of monthly.
• Not registering for SKSPS until after an accident. Cover starts only once a contribution is paid and recognised.
• Choosing SKSPS Plan 1 to save RM23 a month. Benefits are based on the plan's insured earning, so an under-insured plan pays much less if you can't work.
• Contributing RM100 to i-Saraan and stopping. The 20% incentive is worked out on the year's total, so aim for RM2,500 in the calendar year to get the full RM500.
• Mixing personal and business money. A separate bank account makes your Form B and any LHDN query far easier.

Quick checklist for the year

1. Register with LHDN for a tax number if you don't have one, and file Form B (e-B by 15 July).
2. Register for SKSPS on PERKESO Prihatin and keep your plan paid.
3. Register for i-Saraan and contribute at least RM2,500 by 31 December to get the full RM500.
4. Keep invoices, receipts and bank statements in one folder.
5. Set aside a share of each payment for tax, or pay your CP500 instalments on time.

Figures are from PERKESO, KWSP and LHDN pages checked in October 2026. Rates and incentives can change with each Budget, so confirm them before you file.