Questions about withholding tax

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.

See also: Who needs to pay withholding tax?, What payments are subject to WHT and at what rate?

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.

See also: What is withholding tax?, Why do I need to pay withholding tax?

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.

See also: What happens if I pay WHT late?, When is WHT due, and what about small payments?

WHT applies to payments made to non-residents in these categories:

• Royalties (10%): software licences, copyright fees, digital ads you set up yourself (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.

See also: Do I need to withhold tax on Google Ads, Meta ads or software subscriptions?, How do I calculate the WHT amount?

Yes. If you create and run your own ads on the platform, like Google Ads or Meta ads, the payment is a royalty, and so are software licences and subscriptions. If the foreign company runs the advertising for you as a service instead, it's a service fee, taxed at the technical fees rate.

The rate depends on the company's country. Google Ads in Malaysia is billed by Google Asia Pacific Pte. Ltd. in Singapore, where the rate on royalties is 8%. Find the rate for any country in the rates table.

See also: What payments are subject to WHT and at what rate?, How do I calculate the WHT amount?

WHT is worked out on the amount before SST.

WHT amount = amount before 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 WHT is RM 10,000 × 10% = RM 1,000.

Use the Calculator to work this out: choose the company, say what you paid for, and enter your invoice amounts.

See also: What payments are subject to WHT and at what rate?, What happens if I pay WHT late?

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 payment amount before SST

The TIN is usually the hardest to find: the Company Directory has it for common non-resident companies like Google, Zoom and GitHub.

See also: How do I find a foreign company's TIN?, Where do I pay withholding tax?

Search the Company Directory by company or product name, like Zoom or Google Ads. Each company's page has its TIN, ready to copy into the CP37 form, with its name and address to match against your invoice.

If the company isn't listed, you can request a listing. You don't need its TIN: send the name and address, and we usually list it within 48 hours.

See also: What do I need to remit WHT to LHDN?, What payments are subject to WHT and at what rate?

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.

See also: What is the CP37S form?, What happens if I pay WHT late?

CP37S is the form for grouping small withholding tax payments. If each payment to a foreign company is RM500 or less, you don't have to pay LHDN within a month of each one. Add them up and file them together on one CP37S, twice a year:

• By 30 June for payments made from December to May
• By 31 December for payments made from June to November

Payments over RM500 still go on the CP37 form within one month of paying. The next CP37S deadline is shown on the homepage.

See also: When is WHT due, and what about small payments?, What happens if I pay WHT late?

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

See also: What do I need to remit WHT to LHDN?, When is WHT due, and what about small payments?

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.

LHDN adds the penalty automatically if the WHT isn't paid by its due date, with no notice first. It isn't paid with the WHT: pay the WHT on its form as usual, then pay the penalty separately on Form CP147.

Use the Calculator to work out the penalty: tick “I'm paying late” and it shows next to the WHT.

See also: When is WHT due, and what about small payments?, How do I calculate the WHT amount?