cai ae Qin “To emo Tax Act, 1967 provdoo that where aporon (etarred heen a8 “payer taboo maka Payment as listod bolo (thor han corr of rer foon publi ontrerne) oan realdent person ( NR payee, shall deduct iain tx at he poser ao rom such payment and (whether such lax has been deducted or not) pay that tax to the Director General of Inland Revenvo within one month eer such payment hae baen pallor coded othe NI poyee, ‘Al withholding tax payments (other than for non-resident public entortainors) must be made with the relevant payment forms, duly completed, togother with copy of invoices Issued by the NR payee and ‘copy of payment documents as proof of date of payment /ereiting to the NF payeo Type Of Income Subject To Wihhokdng TacWabholdng Tax On Non-Resident Persons: Tncome Tax WihldingTax| Pejmoni Fam ______ Payment Type ‘Act1967 | Rate Used Seaton 107 Contact Paymont (h(a B tora 10% 80% cP ava 41) (0) | a Fa ——— Seaton 108 ic wa Royal Section 108 10% os Spocial asses of comer Technical” | Section 1058 10% Paid face, Payment fo service ntpayment for use of propery = Payot ans income of president publ issued by entertainers: CoM i Assessment ranch For WHT under Section 107A/ 108/ 1098, please ensure that the WHT Forms GP S7A/ CP 37/ CP 8370 are comploted accurately turnishing the Malaysian tax raference number forthe payer, payee 8 well as the payee’s country of origin. It the payer does not ha rhumber from the: the reference number of the payot the payer may request for such Director Non Resident Branch Customer Services Unit 15th Floor, Block 8A Government Office Complex Jalan Duta, 80800 Kusla Lumpur, stating the full name, adress ofthe payee and the nature of payment. For urgent paymant (where the income tax reference numberof the payee le nat known), the payer may send the Forms CP 37A/ CP 87/ CP 37D togethor with he payment, copy of Invoice and. remitance slip (telegraphic transfer) drecly to: Director Collection Branch ‘Withholding Tax Unit 18th Floor, Block BA, Government Offies Complex Jalan Duta, 80600 Kuala LumpurWithholding tax on resident individuals f —ncome Tax | Withhotaing Tay | Paymenttye | act 1967 || Rate | Tatereat (other than exempt intorast) L_pald by approved financial institutions eeoucentey eo Qe ee (Qther than for withholding tax on non-resident public entertainers and resident individuals) Tho following constitutes non-compliance: 1, The payor falls to pay withholding tax atthe prescribed rata (whether deducted or not) 2 The payer pays withholding tax ate (not within the period of one month efter Dale of payment / Croditing to the NR payee). 3. Tha payer falls to pay increase in tax imposod on him for late payment of withholding tax or for failure to pay withholding Enforcement \wrare tn pay al pay wong or aye wn taxi (no itn fe pr of one ‘month after the dato of payment / cradling fo the NR payee), he an increase in tax of an ‘Smount equal to ton percent ofthe payment subject to withholding tax deduction. Bible ee Se NS iets Sate ren: Foyt pad to NR payee on 02/06/1808 200,000 ‘Withholding tax recelved by LHDN on 25/07/1999 lator than 02/07/1889) 20,000 Jneroase in tax Imposed on payer (200,000 @ 10 %) 20,000 Whore the payer falls to pay withholding tax and / or narease In tax imposed on him: "No dedluation fs given forthe payment made to a NF. payee against business Income Inthe Inoome: tax computation of the payer, and Civil suit action on the payer lo recover withholding tax and /or increase in tax not paid which romaine a debt dus to the Government Contact paymenis made fo non siden contactor in respect sarvice under a contact aro ‘subject fo withholding tax of: 4, 18% on the service potion ofthe contract paymants on account of tax payable by the NA ayes; and 2.6 % on the service portion ofthe contract payments on account of tax payable by employees ‘of tho NF payeo 3, "Services under a contract" moans any work ot professional services porformod or rendered ‘in Malaysia in connection with or in relation to any undertaking, project or scheme caried on in Malaysia 4, The payer must, within one month after the date of payment / crediting the contract payment, amit the withholding fax (wivether deducted or nol) to the Inland Revenue Board, Malaysia. Seo “withholding Tax Deduction" Interest paid to a NR payoo is subject to withholding tax at 15% (or any other rate as proscribed ‘Under the Double Taxation Agreement between Malaysla and the country where the NF payee ls tax resident). This is final tax.Interest fs deemed derived from Malayata I: 1. Responsibly for payment lls with the Government ora State Government or 2, sponsibility for payment les witha resident of Malays; oF 3. Intorest is charged as an outgoing or expense agains! any Income acorung in or derived from Malaysia, Interest not subject to withholding tax 1. Interest paid to a NA payee on an approved lean 2 lores ped toa NF paye by aIcensod bank orKeansad ance company a Malaysia thor an Such interest accruing to a place of business In Malaysia of the NR payeo * _Intarest on funds require for maintaining not working funds prescribed byBank Nog + Interest paid to a non-resident individual in respect of securtiae or bonds issued by the ‘Government. * Interest paid to « non-resident indlvidual in respect of bonds, other than convertible loan stock, Issued by publle companies Fstod on the Kuala Lumpur Stock Exchange Intorest paid toa non-resident individual in raspect of bonds, other then convertible loan stock, |saued by a company raled by Rating Agency Malaysla Bhd, or Malaysian Rating Corporation Sha, ‘© interest paid to a non-resident incvidual in rospect of Bon Simpanan Malays Issued by the Central Bank of Malaysia ‘© Interest from a Labuan Offshore company “The payer must, within ono month alter the date of payment radiing the interest, rom tho withholding tax (whether deducted or not to the Inland Revenue Board, Malaysia, See "Wihholding ‘Tax Deduction Penalties for non compllance:See “Enforcement For Compliance" Royalty Pald To Non-Resident Persons (NR payee) Royalty is defined as :Any sums paid as consideration forthe use of, or the right to use:- + Copytighs, artistic or sclnttc works, patents, designs or models, plans, secret processes or formulae, trademarks or tapas for raco or television broadcasting, motion pti fms, fms or video tapes or othor meens of repraduotion where euch fms oF tapes have best oF are to be used oF ‘eproduced in Malaysia or ather ko property or right Know-how or information conceming technica, industial, commercla or scenic knowledge, ‘experience or sil ‘income derived trom the alienation of any property, know-how or information mentioned in above paragraph of this deft. subject to withholding tax at 10% (or any othor tundor the Double Taxation Agreement between Malaysia and the country whero the NF payoa Is tax rosidant), Ths fe final tax.Royally domed derived from Malaysia tf: 1. Responsibly for payment les with the Government or a Stato Government; oF 2: Rasponsibilty for paymont les wth a resident of Malaysia; oF 3. _The royalty Is charged as an oulgoing or expenso against any income accruing in or derived from Malay ‘The payer must, within one month after the date of payment / crediting the royalty, romit the withholding tex (whether deducted or rot) othe Inland Revenue Board, Malaysia, See "Withholding Tax Deduction" Gin Re Royalty 1s defined as :Any sums paid as consideration forthe use of, or the right to us* Copyrights, artiste or sclentite works, patonts, dasigns or modiols, plans, secret processes or formulae, trademarks or tapes for radio or tlovision broadcasting, motion plctre films, flms or video tapes or other means of reproduction where such fms or tapes have been or are lobe used or reproduced In Malaysia or other ike property or rights, * Know-how of information concerning technical, industlal, commercial or sclentili knowledgo, experienos or skill. ‘Income derived from the alienation of any property, know-how or Information montioned In above paragraph of this defnion. The gross amount of royally pald to a NR payee ls subject to villhholding tax at 10% (or any other rato as presorbed under the Double Taxation Agreement between Malaysia and the country whero the NF payee is tax resident). This Is a final tax.Royalty deemed derived from Malaysi 1. Responsibility for paymont ils with the Government or a State Government; oF 2 sponsibility for payment lies with a resident of Malaysia; or 3. “The royalty is charged as an outgoing or expense against any income accruing in or dorived from Malaysia. ‘The payer must, within ono month ater the date of payment / erecting the royally, remit the ithholding tax (whether deducted or nel) fo the Inland Revenue Board, Melayeia. See ‘withholding Tax Deduction” ‘Special classes of income include: 1. payments for services rondered by the NR payee or his employee in connection with the use ol property or rights belonging to or the instalation of operation of any plant, machinery or apparatus from the NA payeo. 7 stance or services rendered in connection with technical Management or administration of any scientific, industial or commercial undertaking, venture, project or schome or 8, rants or other paymants (made under any agroemant or arrangement) for the use of any moveable property. Provided that In respect of paragraph (1) and (2), this section shall apply tothe amount atibutabio to services which are performed in Malaysia. Payment deemed dorived from Malayota it: 41, Responsibitty for payment lies with the Government or a Stato Government; or 2, Rosponsibilty for paymont les with a resident of Malaysia. ‘3. Payment is chargad as an ouigolng or expense in tho accounts ofa business carried on in Malaysia. Tho gross amount of "Special Classes OF Income" pald for tho above services rendered by NR payee Is subject to withholding tax al 10% (or any other rate as prescribed in the Doublo ‘Taxation Agreement betweon Malaysia and the country in which the NR payee Is tax resident), This atinal tax. ‘The payer mus, within one month after the date of payment / erecting ofthe payment to the NAL payee, romit the withholding tax (whather deducted or not) tothe Inland Revenue Board, Malaysia . Seo “Withholding Tax Deduction’ Gin rir a ee Inatest (thr than exempt intro pao raedent ndicuas by approved thancllinstttlons in eubjea to withelng tx at 8, Lo ‘According to procont practice, the payor is roquired to remit the withnolding tax (whether deducted oF rol) for six-monthiy periods tothe Inland Revenue Board within one month ater the expiry of each ‘sbe-monthiy periods together withthe external audior’s report In detaul, the amount of tax that should have bean deducted wil be a debt due fo the Government and racoverable rom the payer.‘This tax isa Final Tax. Taxpayers need not declare euch Interest Inthe annual lax returns Approved financlat Institution 4, _Abank or finance company loonsed under the Banking and Financial Inttution Act 1989 (BAFIA) or tho 2, Islamic Banking Act 1969 (184). ‘A ragistored cooperative society {Bank Simoanian Nasional (BSN) Bank Pertanian Mealayela Lembaga Tabung Hall Malaysia Building Soolty Bhd. Bomaa Housing Morigage Finance Bhd, ‘Any other insti that may bo approved by the Minister of Finance Interest for rasidont individuals exempt from withholding tax Include: 1. _Interest or bonus from any saving accounts or deposi under the “Save as You Eam Scheme" with Bank Simpanan Nasional 2. Inerest from saving deposits of up to RM100,000 with an approved financial inetituton 3, Bonus from saving accounis with Lembaga Tabung Haj 4. _ Interest from fixed deposit accounts (Including negolable corticates of deposit) of upto FM100,000 for a period not exceeding twolve months with an approved fnandil ination 5, _Intorost trom fixed deposit accounls (including negotiable cerieates of deposits) without Init ‘of amount fora poriod of twelve months or more with an approved finarolalinettslons, 8. Gains or profs on dapesits of upto FM100,000 in any saving account under the “Intorost- Fre Banking Scheme (IFBS) whh a bank or finance company licansed undor he BAFIA or IBA, 7. Gains or profits from any investment account of up to F100,000 for a period not exceeding {wlve month with a bank of finance company licensed under the BAFIA or IBA 8. Gains or profits fram any Investment account without Init of amount fr a period of twelve ‘months or more under the “Inferest-Free Banking Scheme" wih a bank or finance company iconsed under the BAFIA or IBA 8 — ee Geen Sa *Publle Entertainer* moans a stage, door tolevsion att, a musielan, allele or an invidal xorising any pression, voatan or employment of smi natu, ‘Romuneration or other income in respect of sorvioes performed or rendered intalaysia by @ Non- resident pubic entertainr is subject to withholding tax at 18 % on the gross payment.The present practice continues whereby the sponsor of the non-resldant public entertainer ie required to pay ‘withholding tax at 15 % before an entry parm forthe non-resident pubic entarainar can be ‘baled from the Immigration Authorly i Ee Malaysia has concluded about 47 ofectva Double Taxation Agreements wih other ecuntes. For infomation on tho varying rate of wthnldng tax on intros, royaly and technical foes, see “Agsossment of Tax “OTA. For relund of winnolding tex overpald by th payor duo to the DTA reduced ras, Iho payoe must forward the application fr vlund the Dhetor, Nan Resident Branch togater with the following det: + Rlason forthe refund. 1 ‘Tax rosident certiicao ofthe payee (rom the tax autholy ofthe country whore the ayoo Is tax osident 2 Evidences to prove that the conditions stipulated in the DTA are mat Proof of payment of withholding tax Nota: Amendment on the Act under Section 107A and Saction 4A, Income Tax Aot 1967 put into force on the 218 Septem1, Stating on the 21st Soptombor 2002, tho appliablo withholding tax rate under sub-Soction 107A (1) Is ton porcont (1034) compared to previous rat of ith toon porcont (15%). For withholding tax ‘ato under sub-Sectlon 107A (1) (b) Is tvae pereant (3%) compared to previous rate of vo poreant 6%. 2, Starting on the 21st September 2002, any paymont for tochnical servcosiconsuitancy/instalation ‘of plant & machinery which is porformad outside Malaysia (off-shore), ae not subject to withholding tax on condition the "payer’ and "payee" need to furnish documents as evidence, which convince the Inland Revenue Board. However this provision doos not apply for speclalclassos of income undor Section 44 (il), Income Tax Act 1967.