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What is Withholding Tax ?

Withholding tax is 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.

Payment Subject to Withholding Tax

The following types of payment are subject to withholding tax when paid:

• Contract payment
• Interest
• Royalty
• Special classes of income: technical inquiries, service fees, leasing or use of movable assets
• Income of public entertainers who are not tax residents
• Income under section 4(f) of the Income Tax Act 1967

When to pay Withholding Tax ?

The payer must pay the withholding tax within one month after paying or crediting the recipient

Consequences of failure in paying Withholding Tax

Late payment penalties (10% of the unpaid tax) will be imposed