Deferment of Remittance of Withholding Tax on Payments to Agents, Dealers and Distributors

Section 107D of the Malaysian Income Tax Act ("ITA") was introduced with effect as of 1 January 2022, whereby companies are required to withhold tax at a rate of 2 percent on payments made to agents, dealers and distributors; and remit the tax withheld to the Inland Revenue Board of Malaysia (“IRBM”).

This applies to agents, dealers or distributors who are individual residents and have received more than RM 100,000 (in cash and non-cash) from companies in the immediate preceding YA. The tax withheld must be remitted to the IRBM within 30 days from the date the amount was paid or credited to the agents, dealers or distributors. Companies that do not comply with the remittance requirements under section 107D of the ITA may be subject to an increase in tax of 10 percent of the amount to be remitted. In addition, a tax deduction will not be allowed on the expenses in case the Withholding Tax payment has yet to be remitted to the IRBM.

However, on 12 January 2022, the IRBM announced a deferment of remittance of Withholding Tax on payments to agents, dealers and distributors until 31 March 2022. This deferment was implemented by the IRBM to ensure that impacted companies are able to make the necessary preparations and appropriate notifications to their agents, dealers or distributors accordingly. In line with the announcement, companies are also allowed to remit to the IRBM the 2 percent tax withheld on payments made to their agents, dealers or distributors for January to March 2022 from 1 April 2022, without incurring any increase in tax of 10 percent.

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Deferment of Remittance of Withholding Tax on Payments to Agents, Dealers and Distributors

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