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.
Type of income subject to withholding tax:-
| Contract Payment | Section 107A (1) (a) & 107A (1) (b) | 10%, 3% |
| Interest | Section 109 | 15% |
| Royalty | Section 109 | 10% |
| Special classes of income: Technical fees, payment for services, rent/payment for use of moveable property | Section 109B | 10% |
| Interest (except exempt interest) paid by approved financial institutions | Section 109C | 5% |
| Income of non-resident public entertainers | Section 109A | 15% |
| Real Estate Investment Trust (REIT) (i) Other than a resident company (ii) Non Resident company. (iii) Foreign investment institution effective from 01/01/2007 | Section 109D | 10% 25% 10% |
| Family Fund/Takaful Family Fund/Dana Am (i) Individual and other (ii) Non Resident Company | Section 109E | 8% 25% |
| Income under Section 4(f) ITA 1967 | Section 109F | 10% |
Enforcement
Where the payer fails to pay or pays withholding withholding tax late (not within the period of one month after the date of payment / crediting to the NR payee), he is imposed an increase in tax of a sum equal to ten percent of the amount which he fails to pay is imposed.
Refund Of Withholding Tax
For refund of withholding tax overpaid by the payer due to the DTA reduced rates, the payee must forward the application for refund to the Director, Non Resident Branch together with the following details:
Tax resident certificate of the payee from the tax authority of the country where the payee is resident.
Evidence to prove that the conditions stipulated in the DTA are met.
Proof of payment of withholding tax.
