Tax Update on Withholding Tax

1. Withholding Tax on Payment Made to Agents, Dealers, Distributor - Credit Note

On October 21, 2022, the Frequently Asked Questions (FAQ) on 2% withholding tax on payment made to agents, dealers, or distributors under Section 107D of the Income Tax Act 1967 was updated by the Inland Revenue Board.

Previously FAQ stated payment by way of credit note is not subject to withholding tax.

Under the latest item A6 of FAQ, IRB clarify that the determining factor on credit note which is subject to withholding tax depends on the substance of payment (not the label on the document itself).

If it is proven that the credit note is a commission payment in the form of cash arising from sales, transactions and schemes carried out by agents, dealers and distributors, then the provision of S107D of the Income Tax Act 1967 shall be applied.

Refer to our past blog posting on withholding tax payments to agents.

https://www.ktp.com.my/.../2percent-withholding.../17mar22

https://www.ktp.com.my/.../2percent-withholding.../21apr22

https://www.ktp.com.my/.../2percent-withholding.../12july22

2. Payment of small value withholding tax– new form

On 27 October 2022, IRB has issued a media release on the new form for payment of withholding tax on small values.

Form CP37S on royalties and interest income

Form CP37DS on a special class of income under Section 4A of the ITA 1967

Refer to our past blog posting on small-value withholding tax

https://www.ktp.com.my/.../small-value.../19aug22

https://www.ktp.com.my/.../small-value.../07oct22

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