Withholding Tax In Malaysia Part 2 of 2 

eKTP 114

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Types of Payments that is subject to
Withholding Tax

A) Contract Payment → S107A → 10%(Contractor’s liability) + 3%(Payment as employee’s liability) – Form 37A

  • Services under a contract → performing or rendering of any work or professional services

  • Contract project → Include any undertaking , project or scheme carried on, carried out or performed in Malaysia. For example: Construction project, computerization projects, ERP software (6mths developer)


B) Special Classes of Income → S109B → 10% – Form 37D

4A(i) → Services rendered in connection with use of property, installation/operation of plant. For example: Installation and commissioning services,Provision of personnel for advisory or supervisory services.

4A(ii) → Technical or management services.
For example: Technical services, Specially tailored training course, IT maintenance/supportservice IT, Consultancy services, Legal services, Management services, Marketing services, Testing/caliberations services.

4A(iii) → Rental of moveable properties
For example: Slot hire/charter, Leasing of ships/aircraft, Time charter fees.


C) Interest → S109 → 15% – Form 37

  • Return or consideration for use by any one party of money belonging to another party

  • Compensation for retention or non-payment of money (or compensation for delayed payment)


D) Royalty → S109 → 10% – Form 37

  • Copyrights, artistic/scientific works, patents, design/models/plans, secret processes/formulae, trademarks, tapes for audio/television broadcasting, motion pictures films/video tapes, know-how/information concerning technical and etc

Latest development of withholding tax

Use or right to use / Income from alienation

  • Copyrights, patents, trademarks, etc

  • Know-how

  • Tapes, movie films


Reception / Right to receive

  • Software

  • Radio frequency spectrum license

  • Visual images or sounds

  • Forbearance


E) Public Entertainer → 109A → 15% – Form 600FA

  • Individual who uses his intellectual, artistic, musical, personal or physical skill/character. For example: Model, Compere, Circus performer, Lecturer, Speaker, Sportsperson


F) Other gains / Profits failling under S4(F) → 10% – Form 37F

  • Criteria to consider whether a payment is subject to S109F or S109B

i) Revenue and not capital in nature
ii) Not income that falls under paragraphs 4(a) to 4(e) and S4A of the ITA
iii) In the nature of miscellaneous income (i.e. casual in nature)
iv) Isolated transaction
v) Absence of repetition of transaction

When Withholding Tax is due

  • Within one month after paying or crediting the NR

  • WHT due date hinges on when the amount is paid or credited to the non-resident WHT


* Crediting:

  • More than a mere journal entry or an accrual of the liability in the accounts of the payer and an amount is considered as having been credited if the amount is available to or for the benefit of the non-resident payee

  • Contra situation means a situation in which the amount is made available to offset any amount owing by the non-resident payee in the company’s records

  • Date of crediting → refers to the date the amount is paid or the date the amount is credited in the bank account of the recipient or the date of a contra entry

 
Darren Yap