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CP38 is an instruction from LHDN telling you to deduct extra tax from a specific employee's salary to settle their outstanding tax. CP39 is the monthly submission you make to LHDN for the regular PCB (monthly tax deduction) you've collected from all your employees. In short, CP38 applies to individuals LHDN names, and CP39 covers your whole payroll every month.
Both flow through the same payroll run and the same LHDN system, so it's easy to mix them up. In this guide, we'll walk you through what each one means, how they differ, and how to handle both correctly in 2026.
Key takeaways
- CP38 is an LHDN directive to deduct additional tax from a named employee, on top of their regular PCB.
- CP39 is the employer's monthly PCB submission covering every employee subject to PCB.
- Both are due to LHDN by the 15th of the month after salary is paid.
- Both are submitted and paid through e-PCB Plus on MyTax, which replaced the e-PCB, e-Data PCB and e-CP39 systems.
- Late or missed deductions and payments can lead to compound penalties or prosecution.
What is CP38?
CP38 is a deduction instruction that LHDN (the Inland Revenue Board of Malaysia, also called HASiL) sends to an employer. It tells you to deduct a set amount from a specific employee's salary for specific months, to help settle that employee's tax arrears.
The notice states the employee, the amount to deduct each month and the period it covers. Your job is to follow it exactly: deduct the stated amount and remit it to LHDN on time.
Why does LHDN issue CP38?
LHDN typically issues a CP38 when an employee has unpaid tax that their regular PCB didn't cover. Common reasons include:
- Outstanding tax from a previous year of assessment
- Regular PCB that was too low for the employee's actual tax liability
- Additional income, such as rental or side income, that wasn't fully taxed through PCB
A CP38 isn't a penalty on you as the employer. It's a collection tool, and you're the channel LHDN uses to collect.
What CP38 looks like on a payslip
CP38 appears as a separate deduction line, alongside regular PCB. It doesn't replace PCB, so an employee with a CP38 instruction sees both deductions every month until the CP38 period ends. Here's an illustrative example (amounts are for illustration only):
EPF, SOCSO and EIS contributions still apply as usual. We've left them out here to keep the tax lines clear.
What is CP39?
CP39 refers to the employer's monthly PCB statement and remittance to LHDN. Every month, you report the PCB deducted from each employee and pay the total to LHDN. The name comes from the old paper CP39 form, and the term stuck even after the process moved online.
Today, you submit this data and pay through e-PCB Plus on the MyTax portal. LHDN introduced e-PCB Plus to consolidate its earlier systems (e-PCB, e-Data PCB and e-CP39), and those legacy systems became read-only after 15 January 2025. If your team or payroll guides still refer to the e-CP39 portal, it's time to update them.
CP38 vs CP39: What's the difference?
Both involve tax deducted from salary and paid to LHDN, but they serve different purposes. Here's how they compare.
One practical point: when a new hire fills in a TP3 form, the PCB total they report (field C5) excludes CP38. That keeps an employee's regular PCB history separate from any arrears they paid through CP38. Our TP3 form guide [confirm URL] covers this in more detail.
How to handle a CP38 notice, step by step
- Check the notice. Confirm the employee's name and identification number, the monthly amount and the months it covers.
- Set up the deduction in payroll. Add CP38 as its own deduction item for that employee, separate from PCB, starting from the month stated.
- Tell the employee. Let them know the deduction is coming and why, so the change to their take-home pay isn't a surprise. They can contact LHDN directly with questions about their tax balance.
- Submit and pay by the 15th. Include the CP38 amount in your e-PCB Plus submission for that month and pay by the 15th of the following month.
- Stop when the period ends. Remove the deduction once the months in the notice have passed, or when LHDN tells you to stop.
- Keep records. File the notice and your payment confirmations with the employee's payroll records.
What if the employee leaves?
If an employee resigns or leaves before their CP38 deductions finish, let LHDN know. The employee stays responsible for settling any remaining balance directly with LHDN. Remember that departing employees may also trigger your usual tax clearance steps, such as Form CP22A, which you submit within 30 days.
How to submit CP38 and CP39 through e-PCB Plus
Both CP38 and regular PCB go through e-PCB Plus on MyTax. The general flow looks like this:
- Register access. Make sure your company has an administrator and representatives registered in e-PCB Plus.
- Prepare your data. Generate the monthly PCB data file from your payroll system, in the format LHDN specifies. CP38 amounts are reported alongside regular PCB for the relevant employees.
- Upload or enter the data. Log in to MyTax, open e-PCB Plus, and upload the file or key in the details.
- Pay. Complete payment through FPX or another channel LHDN accepts.
- Save your receipts. Download the payment confirmation for your records.
LHDN updates its data specifications and portal screens from time to time, so check the latest guidance on the LHDN employer payroll page before each tax year.
What happens if you miss a deadline?
LHDN treats PCB and CP38 compliance seriously, and the responsibility sits with the employer. According to LHDN's employer guidance:
- Paying after the 15th can lead to a compound penalty.
- Failing to deduct, or deducting too little, can lead to a compound and prosecution.
- Deducting tax but not paying it to LHDN is a criminal offense.
The simplest way to stay safe is to treat the 15th as a hard monthly deadline and build CP38 instructions into your payroll the month they arrive.
Keep CP38 and CP39 on track with Omni
CP38 notices arrive at random, while PCB runs every month. Omni, our all-in-one HRIS and multi-country payroll platform, helps you handle both inside your regular payroll:
- Malaysia payroll that calculates PCB alongside EPF, SOCSO and EIS each month.
- A customizable employee database that keeps CP38 notices and payment records on the employee's file.
- Payroll reminders and approvals that help your team hit the 15th every month.
- AI features that help your team answer payroll and policy questions faster.
And if you run payroll in more than one country, you can manage Malaysia alongside your other markets from one platform.
See how it works with a demo, or start a 7-day free trial.
Frequently asked questions
What does CP38 mean on my payslip?
It means LHDN has instructed your employer to deduct extra tax from your salary to settle tax you owe from an earlier period. The amount and duration come from LHDN, so contact LHDN if you have questions about your balance.
Is CP38 the same as PCB?
No. PCB is your regular monthly tax deduction for the current year. CP38 is an additional deduction for outstanding tax, and it's shown as a separate line.
Can an employer stop a CP38 deduction early?
No. The employer follows the notice for the months it covers, unless LHDN instructs otherwise. If the employee has settled the balance directly, they should ask LHDN to confirm this to the employer.
What is the difference between CP39 and PCB?
PCB is the tax deducted from each employee's salary. CP39 is the monthly submission the employer makes to report and pay that PCB to LHDN.
Is e-CP39 still available?
No. LHDN replaced e-CP39, e-PCB and e-Data PCB with e-PCB Plus, and the old systems became read-only after 15 January 2025.
Apa maksud CP38?
CP38 ialah arahan daripada LHDN kepada majikan untuk membuat potongan cukai tambahan daripada gaji pekerja tertentu bagi menyelesaikan tunggakan cukai pekerja tersebut. Potongan ini dibuat selain PCB biasa dan perlu dibayar kepada LHDN sebelum 15 haribulan bulan berikutnya. [Native BM review before publishing]
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