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FAQ: Withholding Tax (WHT) on Payments Made to Agents, Dealers or Distributors of a Company


On the 17th March 2022, the Inland Revenue Board “IRB” has issued a FAQ on the deduction of tax at on payments made to agents, dealers or distributors by a Company.


We have summarized the FAQ as per follows:



Questions

Answers

What are the rates of WHT?

Withholding tax rate of 2% is applicable on payments in monetary form made to agents, dealers or distributors.

What kind of income is subjected to WHT?

All types of payments (e.g., commissions and incentives) in the form of monetary resulted from sales, transactions or schemes. Payments in the form of credit notes, contra and discounts are not subjected to WHT.

What is the threshold of income that is subjected to WHT of 2%?

WHT is applicable to payments made to resident agents, dealers or distributors who are individual residents and who have received more than RM100,000 of such payments in monetary of non-monetary form from the same Company in the immediately preceding year of assessment “YA”.

When is the effective date for WHT of 2%?

Effective from 1 January 2022, under Section 107D of the Income Tax Act 1967.

​Do agents need to have an income tax number?

Yes, agents will need to have income tax number and registration can be made for those that do not have a number yet.

How to make payment of WHT?

Payments can be made via postage or paid through the following IRB counters:

  • IRB Kuala Lumpur

  • IRB Kuching

  • IRB Kota Kinabalu


*Receipts will be issued if payments are paid through IRB counters

What are the forms to fill up for payment of WHT?

The Company will need to declare the WHT by filing up the Form CP107D and Appendix CP107D at the IRB official portal. Each Appendix is limited to 20 agents.

Any other declaration forms to comply by the Company?

​The Company will need to declare the 2% of WHT in CP58.

When does the Company needs to pay WHT?

WHT of 2% must be remitted to IRB 30 days from the date of payment to agent, dealer or distributor.

  • Date of payment to agent, dealer or distributor from 1 January 2022 to 2 March 2022, the deadline for WHT to be remitted to IRB, 1 April 2022.

  • Date of payment to agent, dealer or distributor on or after 3 March 2022, the deadline for WHT to be remitted to IRB is 30 days from the date of payment to agent, dealer or distributor.

What are the penalties for failure of remittance to IRB?

10% of penalty will be imposed on Company who fails to remit the 2% of WHT to IRB within the given deadline. At the same time, the Company is not allowed to claim tax deduction.

Source:

https://phl.hasil.gov.my/pdf/pdfam/Soalan_Lazim_Seksyen_107D_ACP_1967_17032022.pdf https://www.hasil.gov.my/en/forms/download-forms/download-form-withholding-tax/






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