Published On: 28/11/2025By

Benefits in Kind (Manfaat Berupa Barangan) in Malaysia: What Employers Must Know

In Malaysia, many companies offer extra perks beyond basic salary — such as a company car, phone, accommodation, or even gym memberships. These are known as Benefits in Kind (BIK) or manfaat berupa barangan.

They are non-cash benefits, but they still carry monetary value and can affect how you calculate PCB, prepare EA forms, and report to LHDN. As an employer or HR team, it’s important to understand how BIK works so you stay compliant and avoid reporting mistakes.

What Is Manfaat Berupa Barangan (Benefits in Kind)?

Benefits in kind refer to non-cash items provided to an employee by the employer. They are not part of the monthly salary, but they still count as income because the employee receives value from them.

Examples:

  • A company car used for personal and work purposes

  • Company-paid accommodation

  • Phone or laptop for work and personal use

  • Club or gym memberships

  • Domestic helpers, gardeners, or drivers

  • Free or subsidised meals

  • School fees paid for employees’ children

Under Malaysian tax law, many of these benefits are taxable and must be reported.

Why Employers Offer BIK

Companies provide BIK for several strategic reasons:

1. To Attract and Retain Top Talent

Perks like a car, phone, or accommodation make your offer more competitive and help retain key employees.

2. To Provide Meaningful Non-Cash Rewards

Some employees value practical support more than a higher salary — e.g., subsidised housing or gym access.

3. To Optimise Compensation Packages

BIK helps employers deliver value without drastically increasing payroll, while improving overall employee satisfaction.

Tax Implications of BIK

As an employer, you must recognise how BIK affects tax reporting.

1. BIK Is Taxable Under the Income Tax Act

LHDN considers BIK part of gross income. It must be included when calculating PCB (Monthly Tax Deduction).

2. It Increases Employee Chargeable Income

When employees receive BIK, their tax bracket or PCB amount may change.

3. Employers Must Calculate BIK Value Correctly

LHDN provides two calculation methods:

Prescribed Value Method

Uses fixed values provided by LHDN (e.g., for cars and accommodation).

Formula Method

Used when no fixed rate exists.
BIK Value = Cost to Employer – Employee Contribution

How Employers Must Report BIK

To stay compliant, employers must ensure accurate annual reporting.

1. Include BIK in EA Form (Section C)

All taxable BIK must be shown clearly in the employee’s annual EA form.

2. Declare BIK in Form E (Employer’s Return)

Employers must also report all BIK to LHDN.

3. Keep Proper Documentation

Maintain records of:

  • Type of benefit

  • Date and duration

  • Employees who received it

  • Calculation method used

This helps during audits or LHDN queries.

Common Types of BIK in Malaysia

Here are the benefits most commonly offered by Malaysian employers:

1. Company Vehicle (Personal Use included)

Taxable if used for personal commuting or private trips.

2. Accommodation Provided by Employer

Includes company-owned housing or paid rental units.

3. Utilities or Domestic Staff

E.g., electricity, water, internet, or maid services paid by the company.

4. School Fees for Children

Taxable unless specifically exempted by LHDN.

5. Gym or Club Membership

Taxable when for personal use.

6. Loans With Reduced Interest

The interest difference is considered a taxable benefit.

How to Calculate BIK Value

1. Prescribed Value Method

Examples:

  • A 2,000cc company car may have a fixed annual prescribed value (e.g., RM3,600).

  • Accommodation value is based on annual rental or 30% of gross income, whichever is lower.

2. Formula Method

Useful for benefits like gym memberships or education fees.
Example:
Company pays RM2,000 for gym membership.
Employee pays RM500.
Taxable BIK = RM1,500

Tax-Exempt or Partly Exempt BIK

Not all benefits are taxable. These common items are fully or partially exempt:

  • One work-related mobile phone, laptop, or tablet

  • Meals provided at workplace

  • Parking near or at the office

  • Medical, dental, maternity, and traditional treatments

  • Group insurance premiums (non-investment types)

  • Long service awards (up to RM2,000)

  • Childcare benefits (if employer provides or pays directly)

Frequently Asked Questions (FAQ)

1. Are BIK taxable for all employees?

Yes — but exemptions apply depending on the type of benefit.

2. What’s the difference between allowance and benefit in kind?

  • Allowance = cash

  • BIK = non-cash item

Both may be taxable but are reported differently.

3. How to declare BIK in EA Form?

Declare under Section C: Value of Benefits in Kind.

4. Can BIK be given to part-time or contract workers?

Yes, depending on company policy — but tax rules still apply.

5. What BIK are tax-exempt in Malaysia?

Examples include:

  • One mobile phone/laptop/tablet

  • Parking

  • Meals

  • Medical benefits

  • Certain insurance premiums

  • Long service awards (within limits)

How Pandahrms Helps Employers Manage BIK Easily

Handling benefits in kind can get complicated — especially during year-end payroll and EA form preparation.
With Pandahrms, HR teams can:

  • Track all BIK given to employees

  • Record values using LHDN-recommended methods

  • Automate tax-impact calculations for PCB

  • Auto-populate EA Form details

  • Maintain audit-ready records

This ensures accuracy, compliance, and smooth year-end processing.

If your company provides BIK, having the right HR system makes all the difference.