Question 1

What is withholding tax?

Accepted Answer

Withholding tax (WHT) is a tax deducted upfront when a Malaysian company pays a foreign (non-resident) company. The payer pays it to LHDN (Malaysia's tax authority) on behalf of the foreign company.

Question 2

Who needs to pay withholding tax?

Accepted Answer

Any Malaysian company or individual that makes payments to a non-resident company for services like software subscriptions, licensing fees, consulting, or interest on loans. The Malaysian payer is responsible for deducting the tax and remitting it to LHDN.

Question 3

Why do I need to pay withholding tax?

Accepted Answer

Foreign companies don't file tax returns in Malaysia, so WHT is how Malaysia collects tax on money leaving the country. It's required under the Income Tax Act 1967. If you don't withhold, your company becomes liable for the tax amount and you lose the right to claim the payment as a tax-deductible expense.

Question 4

What payments are subject to WHT and at what rate?

Accepted Answer

WHT applies to payments made to non-residents in these categories: • Royalties (10%): software licences, copyright fees, digital advertising (e.g. Google Ads, Meta Ads) • Technical & management fees (10%): consulting, IT support, professional services • Interest (15%): loan repayments, financing charges  Regular purchases of physical goods are generally not subject to WHT. A lower rate may apply if Malaysia has a Double Taxation Agreement (DTA) with the foreign company's country. Check the Country Rates table to find the rate for your payment.

Question 5

How do I calculate the WHT amount?

Accepted Answer

WHT is calculated on the gross payment amount, which excludes SST. SST is not subject to WHT as it is a government tax and does not form part of the contractor's income.  WHT amount = gross payment (excluding SST) × WHT rate  For example, if a foreign vendor invoices RM 10,600, made up of a RM 10,000 service fee and RM 600 SST, the gross payment subject to WHT is RM 10,000. Applying a 10% WHT rate, the WHT amount is RM 10,000 × 10% = RM 1,000. The RM 600 SST is excluded from the calculation as it is handled separately.  Use the Calculator to work this out: just enter your invoice amounts and it does the rest.

Question 6

What do I need to remit WHT to LHDN?

Accepted Answer

To remit WHT to LHDN (using the relevant CP37 form), you'll need: • The non-resident company's TIN (Tax Identification Number) • Your company's tax reference number • The applicable WHT rate • The gross payment amount (excluding SST)  The TIN is often the hardest to track down, so search the Company Directory on the homepage to find TINs for common non-resident companies like Google, Microsoft, and AWS.

Question 7

When is WHT due, and what about small payments?

Accepted Answer

WHT must be paid to LHDN within one month from the date you pay the non-resident.  For small payments of RM500 or less each, you don't have to remit one by one. Instead, you can consolidate them using the CP37S form, which is submitted twice a year: by 30 June for payments made from December to May, and by 31 December for payments made from June to November. Check the submission timeline on the homepage to see the current window.

Question 8

Where do I pay withholding tax?

Accepted Answer

WHT is paid to LHDN (Lembaga Hasil Dalam Negeri), Malaysia's Inland Revenue Board. You can make payment online through the MyTax portal or at any LHDN branch office.

Question 9

What happens if I pay WHT late?

Accepted Answer

A 10% penalty is added on top of the unpaid WHT amount. For example, if you owe RM1,000 in WHT and miss the deadline, you'll pay an extra RM100 in penalty. Use the Calculator to estimate the penalty: toggle the late penalty option to see the total.

Company	Country	Address	Tax ID	Royalties	Technical	Interest
Adobe Systems Software Ireland Ltd	Ireland	4-6 Riverwalk, Citywest Business Park, Dublin 24, Ireland	C11192264100	8%	10%	10%
Alchemy	United States	548 Market Street, PMB 49099, San Francisco, CA 94104, United States	C26778683020	10%	10%	15%
Anthropic, PBCClaude	United States	548 Market Street PMB 90375, San Francisco, California 94104, United States	C60438069000	10%	10%	15%
Atlassian Pty LtdJiraConfluenceTrello	Australia	Level 6, 341 George St, Sydney NSW 2000, Australia	C26346535070	10%	NIL	15%
Cloudflare, Inc	United States	101 Townsend Street, San Francisco, California 94107, United States	C26805694030	10%	10%	15%
Cursor	United States	801 West End Avenue, New York, New York 10025, United States	C58383868050	10%	10%	15%
GitHub, Inc.	United States	88 Colin P. Kelly Jr. Street, San Francisco, CA 94107, United States	C24826414010	10%	10%	15%
Google Asia Pacific Pte. Ltd.YouTubeGoogle AdsAdSense	Singapore	70 Pasir Panjang Road, #03-71, Mapletree Business City, Singapore 117371, Singapore	C25211011000	8%	5%	10%
HeyGen Technology Inc.	United States	12130 Millennium Drive, Suite 300, Los Angeles, California 90094, United States	C58698043010	10%	10%	15%
Kingsoft Office Software Corporation LimitedWPS Office	Hong Kong	Suite 3208, 32/F, Tower 5, The Gateway, Harbour City, Tsim Sha Tsui, Kowloon, Hong Kong	C25543373050	8%	5%	10%
OpenAI OpCo, LLCChatGPTSora	United States	1455 3rd Street, San Francisco, California 94158, United States	C60517717010	10%	10%	15%
Railway Corporation	United States	548 Market St PMB 68956, San Francisco, California 94104, United States	C60072915100	10%	10%	15%
RCloud Global Pte. Ltd.	Singapore	25 Seah Street, #02-01, Singapore 188381, Singapore	C60718612070	8%	5%	10%
Twilio Inc.SendGridSegmentAuthy	United States	101 Spear Street, Fifth Floor, San Francisco, California 94105, United States	C58703736090	10%	10%	15%
X Global LLCTwitter	Ireland	One Cumberland Place, Fenian Street, Dublin 2, D02 AX07, Ireland	C60627091040	8%	10%	10%
ZeroSSL GmbH	Austria	Salzgries 19/3+4, 1010 Vienna, Austria	C52565953060	10%	10%	15%