INTRODUCTION
Withholding tax is an essential component of Malaysia’s tax system, serving as a mechanism for the Inland Revenue Board (LHDN) to collect tax at source from non-resident individuals and entities earning income from Malaysian sources. Despite its critical function in ensuring tax compliance, withholding tax obligations are often misunderstood or overlooked by businesses—leading to exposure to penalties, interest, and non-compliance issues.
This training aims to provide participants with a deep understanding of the withholding tax framework, including the legal obligations imposed on payers, the types of payments subject to withholding tax, applicable rates, and practical steps for proper reporting and remittance to the authorities.
OVERVIEW
This session will offer a comprehensive overview of Malaysia’s withholding tax regime under the Income Tax Act 1967, focusing on:
- Who qualifies as a non-resident: Understanding the definition and tax status of non-resident individuals and companies under Malaysian law
- Taxable payments subject to withholding tax, such as:
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- Interest payments
- Royalties
Technical and management fees - Rental of movable properties
Contract payments to non-residents - Payments related to digital services and software usage
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- Applicable withholding tax rates and treaty benefits (if any) under the Double Taxation Agreements (DTA).
- Timing of payment and filing obligations with the LHDN to avoid late payment penalties.
- Common pitfalls and audit risks encountered by businesses.
- Latest developments and case law impacting the interpretation and enforcement of withholding tax in Malaysia.
OBJECTIVE
This training is specifically designed to equip accounting, finance, and tax professionals with the practical knowledge and tools required to manage withholding tax obligations effectively. Upon completion, participants will be able to:
• Identify and assess transactions that attract withholding tax under Malaysian law.
• Determine the appropriate tax rates and DTA reliefs applicable to payments to non-residents.
• Understand the procedural requirements for payment, remittance, and reporting of withholding tax to the authorities.
• Minimize the risk of non-compliance, penalties, and audit disputes by implementing proper internal controls and documentation.
• Apply best practices in reviewing contracts and invoicing to account for withholding tax implications.
