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Withholding Tax in Malaysia:
Withholding Tax in Malaysia: A Guide for Non-Residents & Businesses
π What is Withholding Tax?
Withholding Tax (WHT) is a tax mechanism where a payer in Malaysia deducts a certain percentage from payments made to a non-resident payee and remits it directly to the Inland Revenue Board of Malaysia (LHDN).
This applies when a Malaysian entity (payer) makes specified types of payments—such as for services, interest, royalties, or rental of moveable assets—to a foreign party (payee) who is not a tax resident of Malaysia.
π₯ Who is the Payer and Payee?
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Payer: Any person or business entity in Malaysia (excluding individuals not engaged in business) making payments to a non-resident.
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Payee: Any non-resident individual or foreign entity receiving taxable payments from a Malaysian source.
πΌ Payments Subject to Withholding Tax
The following payments made to non-residents are subject to WHT under the Income Tax Act 1967:
| Payment Type | Applicable WHT Rate |
|---|---|
| Contract payments | 10% (plus 3% for services if applicable) |
| Interest payments (except exemptions) | 15% |
| Royalties | 10% |
| Technical or management services | 10% |
| Rent/payment for moveable properties | 10% |
| Income of non-resident public entertainers | 15% |
| Payments to Real Estate Investment Trusts (REITs) | Varies |
| Section 4(f) income (e.g., guarantees, etc.) | 10% |
π Payment Deadline: Withholding tax must be remitted within 1 month from the date of payment/credit to the non-resident.
π« Common Mistakes to Avoid
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Failing to withhold and remit tax within the 1-month window
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Not identifying when a payment qualifies as "technical service" or "royalty"
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Assuming all foreign entities are exempt
πΌ How We Can Help
We are a licensed Tax Agent under Section 153(3) of the Income Tax Act 1967, registered with the Inland Revenue Board of Malaysia (IRB). We provide expert assistance to ensure your withholding tax obligations are met with confidence and compliance.
β Our Withholding Tax Services Include:
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Assessing whether your payments to non-residents are subject to WHT
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Calculating the correct withholding tax rates based on double tax agreements (DTA)
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Preparing and submitting WHT forms to LHDN promptly
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Liaising with LHDN on WHT disputes, appeals or audits
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Advising on tax-efficient cross-border payment structures
We also assist with GST and income tax matters, including audits, incentives, technical rulings, and dispute resolutions.
π§Ύ Why Choose Us?
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IRB-approved tax professionals
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Deep knowledge of cross-border tax rules
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Proactive planning to avoid penalties
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Seamless communication with IRB
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Tailored advice for your industry and payment types