Welcome to our Crowe Chat Vol.1/2022. In this issue, we will cover the following topics:
A new withholding tax provision under Section 107D of the Malaysian Income Tax Act, 1967 (MITA) was introduced under the Finance Act 2021 with effect from 1 January 2022. Under this new provision, a company is required to impose and withhold 2% withholding tax on gross monetary payments made to a resident individual arising from sales, transactions or schemes carried out by that resident individual as the agent, dealer or distributor of the company.
The company is only required to withhold the said 2% withholding tax on monetary payments paid to the resident individual if the total sum of payments (whether monetary or otherwise) received by that resident individual from the company in the immediately preceding year of assessment (YA) exceeded RM100,000. The withholding tax is to be remitted to the Director General of the Inland Revenue Board within thirty (30) days after paying or crediting the agents, dealers or distributors.
The Inland Revenue Board of Malaysia (IRBM) has issued a Media Release (available in Bahasa Malaysia only) regarding the Implementation of the 2% Withholding Tax on Payments Made to An Agent, Dealer or Distributor.
Details of the Media Release
Since the deadline for payment of the withholding tax is 30 days from the date of payment of the monetary payments to the resident individuals by the Company, some withholding tax may be due for payment to the IRBM in January 2022 to March 2022.
However, the IRBM has agreed to defer the implementation of the remittance of the 2% withholding tax until 31 March 2022. This is to ensure that all payer companies can notify their agents, dealers or distributors regarding the imposition and remittance of the 2% withholding tax. Hence, companies are allowed to delay the remittance of the 2% withholding tax to the IRBM until 1 April 2022 without being subject to any increase in tax.
The IRBM will issue Frequently Asked Questions (FAQs) on this subject matter in due course.
New Income Tax Order
Income Tax (Conditions For The Grant Of Rebate Under Subsection 6D(4)) Order 2021 was gazetted on 31 December 2021.
Details of the New Income Tax Order (extracted verbatim from the relevant Order)
Amended Income Tax Rules
Income Tax (Deduction for Expenses in relation to Secretarial Fee and Tax Filing) (Amendment) Rules 2021 was gazetted on 24 December 2021.
New Income Tax Rules
To legislate the proposal, Income Tax (Deduction for Expenditure on Provision of Employees’ Accommodation) Rules 2021 was gazetted on 24 December 2021.
Details of the New Income Tax Rules (extracted verbatim from the relevant Rules)
More articles and insights