It’s tax season! It is indeed the right time for you to know a basic thing or two about certain tax matters which will help when filing time comes. We take a quick look at Withholding Tax which has been a worry for some businesses where its application is concerned.
In the 2017 National Budget, the Malaysian Government increased the scope of Withholding Tax which lead to some confusion among tax payers. While we would strongly encourage you to consult your tax consultant on how this applies to your business, we, nevertheless, would like to give you a brief illustration on Withholding Tax.
What Is Withholding Tax?
The Inland Revenue Board of Malaysia explains Withholding Tax as an amount withheld by the party making payment (payer) on income earned by a non-resident (payee) and paid to the Inland Revenue Board of Malaysia. In this instance, payer refers to an individual/body other than individual carrying on a business in Malaysia.
When it comes to payments for services rendered/technical advice/rental or others made under any particular agreement to use any moveable property, where those payments are made to a non-resident payee, the payer is required to withhold tax on these payments.
Deductions
In accordance with the Income Tax Act, 1967, where a payer is liable for Withholding Tax payments for items listed in the following chart, to a non-resident person (NR payee), he / she shall deduct and pay withholding tax at the determined rate from such payment within a month after such payment is credited to the NR payee.
To ensure withholding tax payments are done right, you have to ensure the relevant payment forms are duly completed and accompanied with invoice copies issued by the NR payee and copy of payment documents as proof of payment date or crediting to the NR payee.
For more information on Withholding Tax, check out http://www.hasil.gov.my/bt_goindex.php bt_kump=2&bt_skum=6&bt_posi=1&bt_unit=5&bt_sequ=1&bt_lgv=2
For more personalised consultation on Withholding Tax, JS Partners is just a phone call away. Get in touch with us at +603 6250 1615. We will guide you all the way and ensure everything is in order.
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