Withholding Tax Services
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Withholding Tax Services
Withholding Tax
The Withholding Tax represents an amount retained by the paying party (payer) on income earned by a non-resident (payee) and remitted to the Inland Revenue Board of Malaysia.
The term ‘payer’ refers to an individual or entity, excluding individuals conducting business in Malaysia. They are obligated to retain tax on payments for services provided, technical advice, rental, or other payments outlined in any agreement for the use of movable property, directed to a non-resident payee.
The ‘payee’ denotes a non-resident individual or entity outside Malaysia, receiving the aforementioned payments.
As per the Income Tax Act, 1967, if a person (referred to as the “payer”) is liable to remit payments listed below (excluding income of non-resident public entertainers) to a non-resident individual or entity (NR payee), they must deduct withholding tax at the prescribed rate from such payment. Additionally, regardless of whether the tax has been deducted or not, the payer must remit the tax to the Director General of Inland Revenue within one month following the payment or credit to the NR payee.
The following payments are subject to withholding tax:
- Contract Payment
- Interest
- Royalty
- Special classes of income: Technical fees, payment for services, rent/payment for use of moveable property
- Interest (except exampt interest) paid by approved financial institutions
- Income of non-resident public entertainers
- Real Estate Investment Trust (REIT)
- Other than a resident company
- Non Resident company
- Foreign investment institution
- Family Fund/Takaful Family Fund/Dana Am
- Individual and other
- Non Resident Company
- Income under Section 4(f) ITA 1967
