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44 Withholding Tax (WT) - Coggle Diagram
44 Withholding Tax (WT)
is a
tax collection mechanism
to collect tax from NR
NR (recipient)
: receives Y from Msia, taxable in Msia
Msian Co (payer)
:
withhold/deduct tax before making payment to NR
pay only the net amount
(ie. after dedn of WT) to NR
render an account and remit the WT to DGIR
within 1 mth after paying or crediting the recipient
(ie. by the same date of the following month)
WT to
combat tax evasion
by NR
S109
Conditions
R payer
must pay
royalty or interest
to
any person
(ie. 3rd party, X including head office overseas) who known to him as a
NR
the royalty or interest must be
derived from Msia
Royalty
is derived from Msia - S15
IF
responsibility for payment
of the royalty lies with
gov, state gov or local authority
;
OR
IF a
R
is
responsible for paying
the royalty for a YA:
AND
IF the royalty is
charged as an expense
agnst
any Y accruing in or derived from Msia
Interest
is derived from Msia - S15
IF
responsibility for payment
of the int lies with
gov, state gov or local authority
;
OR
IF a
R
is
responsible for paying
the int for a YA:
AND
2nd condition
in the case of int payable on borrowing, R has to
employ
the borrowing for the
pdt of gross Y
derived from Msia; OR
laid out
the borrowings on
assets used in pdt of gross Y
derived from Msia; OR
secure
the borrowings with any
property situated in Msia
; OR
IF the int is
charged as an expense
agnst
any Y accruing in or derived from Msia
N/A
IF
royalty/int
is attributable to a
biz carried on by NR
in Msia
via
PE (ie. an office, a branch) in Msia
- file in ITRF to DG
Tax rates
Royalty: 10%
Interest: 15%
WT paid is
final tax
, no need to report in ITRF
payer has to deduct WT and pay to DG
within 1 mth AFTER the date of paying/crediting such fee to NR
Royalty
Payment for right to use any copyrights, software, artistic or scientific works, patents, designs, tapes for radio or television broadcasting, motion picture films, films or video tapes
Payment for right to receive visual images or sounds, or both, transmitted to the public by satellite or cable, fiber optic
Payment for right to alienation (transfer/disposal) of any property, use of know-how or information
S109B
Conditions
the payer pays
special classes of Y
special classes of Y
S4A(i)
The amt pd to the NR for em'ee services in connection with the
use of property or rights
belonging to the NR; OR
installation
or operation of any
P&M purchased from NR
in Msia
S4A(ii)
The amt pd for
advice, assistance or service carried out in Msia
head office day to day routine admin exp
WT :check:
ie. sh of overhead exp incurred
by NR HO to Msian branch
by a NR P Co to Msian Subs CO
Common exp attracting WT
mgmt or mktg services
consultancy service
specially tailored training course
Out of pocket exp
Tax treatment
part of the contract value
is
Y to payee
under S4A, sub to 10% WT
Reimbursement
incurred by the
payee
(ie. Msian Co)
in the course of
rendering services
to the payer OR
in respect of the
use of any movable property
subsequently
reimburse by payer
ie. cost of airfare, travelling, accommodation, telephone and photocopying charges
Disbursement
incurred by payer
and
pd to 3rd party on behalf of the payee
in connection with
services rendered
by payee OR
in respect of the
use of any movable property
payer bear the exp
, X claim back from payee
X include hotel accommodation
in S4A Y per public ruling
ie. accommodation in hotel, apartment hotel,
service apartment, motel or hotel
aimed at reducing the cost of services provided by NR
Deposit and advance payment
refundable deposit and advance payment
:
X WT, not an Y
non-refundable deposit and advance payment
: subject to WT
Guarantee fees
: X WT
connected with loan/commission for letters of credit
Commission pd to a NR general commission agent for deals transacted overseas
: X WT
Testing services
to meet required stds: subj to WT
in connection with
mgmt or administration
of any scientific, industrial or commercial undertaking venture, project or scheme
S4A(iii)
The amt pd on
rent of any moveable property
ie. slot hire or leasing of ships (excluding freight charge)/P+M
to
NR
derived from Msia
IF responsibility for payment of the special classes of Y lies with
gov, state gov, local authority
;
OR
IF a
R
is
responsible for paying
the royalty for a YA:
AND
IF the royalty is
charged as an expense
agnst
any Y accruing in or derived from Msia
N/A
IF
S4A Y
is attributable to a
biz carried on by NR
in Msia
via
PE (ie. an office, a branch) in Msia
- file in ITRF to DG
WT
10%
on special classes on Y,
final tax
payer has to deduct WT and pay to DG
within 1 mth AFTER the date of paying/crediting such fee to NR
IF
payer bear WT
WT on
amt pd to NR
WT tax pd
X deducted
X an expense W&E incured for the pdt of
payers's gross Y
NR bears WT
WT on
gross fee
(ded for payer)
S107A
Conditions
Contract payment
made to
NR
contractor
for services under a contract
contract payment
any payment made for services under a contract to the NR contractor/his agent/any other person acting on his behalf
WT only applicable to the
service portion
of the contract payments
services under a contract
performing services in Msia, is in connection with any contract project carried out in Msia
WT only applicable to
services performed in Msia; OR
in connection with services performed in Msia
service portion of a contract payment
=
gross contract fee less cost of P&M, labour and material cost
Tax rates
10% of the contract payment
to cover the tax which is payable by the
NR contractor
NR contractor compute
final tax liability
when filing return, IF
Final tax liability of NR contractor
>
10% tax withheld
shortfall of tax
is to be
paid to the DG
Final tax liability of NR contractor
<
10% tax withheld
refund
will be
paid to the NR
3% of the contract payment
to cover the tax which is payable by
em'ee of the NR contractor
will be
refunded
to NR contractor upon
finalization + full settlement of em'ee taxes
will
X reduce tax liability
of the NR contractor
will
X shown in its tax comp
is an
advanced tax
pd to DG
to cover NR contractor's & his em'ee tax
S109F
Conditions
payer pays
S4(f) Y
to NR
S4(f) Y
the payment is
REVEX, X CAPEX
X S4(a)-4(e) Y/ S4A Y
is a
miscellaneous Y
- casual in nature,
occasional Y which is received outside ordinary course of biz
for an
isolated transaction
X repetition of transactions
ie.
G
uarantee fees,
I
ntroductory Fees,
C
ommission
s4(f) Y
derived from Msia
IF responsibility for payment lies with
gov, a state gov or a local authority
;
OR
IF a
R
is
responsible for paying
S4(f) Y for a YA:
AND
IF the S4(f) Y is
charged as an expense
agnst
any Y accruing in or derived from Msia
payment can be in
cash or in-kind
Tax rates
: 10%
is a
final tax
S109A
Y from
NR public entertainer
other than a Co
ie. actors, singers (X need to be prof), sportsmen, speakers, stuntmen etc
consisting of
remuneration
or other Y in respect of
services rendered in Msia
taxed at 15% on the gross amt
is a
final tax
Obligation on payer
deduct WT at appropriate rate
pay WT to DG
within 1 mth
after paying or crediting such fee to NR
tax implication IF
X comply
gross fee for REVEX
under S39,
X ded
unless
WT and penalties fully pd to DG
installation of P+M X QPE, until WT and penalties fully paid
late payment penalty:
10% on WT
WT and penalties are debt due to gov
tax undercharged:
100% penalty on tax undercharged
Revision of Return within 1 yr WT is pd
X tax dedn
IF
WT and penalties X pd
when tax return is
submitted
WT and penalties
paid but late
,
can claim dedn
by
revising return within 1 yr after the end of the yr payment is made
ie.
WT and penalties pd to DG 28.10.2021 - payment in 2021
end of 2021 - 31.12.2021
1 yr after - 31.12.2022 (last date to revise ITRF)
penalties X ded