Withholding Tax In Malaysia Part 1 of 2 

01eKTP 113

02What is the Withholding Tax?

• A mechanism to collect tax from non-resident
• For certain prescribed income which is derived from Malaysia.
• Standard rates based on type of income. May be reduced under Double Taxation Agreement. (“DTA”)
• The payer is responsible to deduct the WHT. Hence, penalty for non-compliance is on the payer.

03Relevant sections of ITA 1967 in relation to WHT

• Special class of income chargeable to tax.
• Derivation of special classes of income.
• Deduction of tax from contract payment.
• Deduction of tax from interest or royalty in certain cases.
• Application of section 109 and 110 to income derived by a public entertainer.
• Deduction of tax from special classes of income derived from Malaysia.
• Deduction of tax from gains or profits derived from Malaysia.

04Applicability of WHT

1. Payment to non-resident → NO

2. Scope of WHT → Not recovered under ITA

3. Derivation of income → Not derived from Malaysia

4. Specific exemption / DTA relief → Full exemption

No WHT Payment required if any one of 1 to 4 above are true.

WHT Payment required if none of the above are applied.