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Updates on withholding tax (WHT) on payments made to agents, dealers and distributors (ADDs)
Pursuant to the Finance Act 2021, effective from 1 January 2022 Section 107D was introduced into the Income Tax Act 1967 to provide that companies making payments in monetary form to ADDs arising from sales, transactions or schemes carried out, will be required to withhold tax at a rate of 2% on the gross amount (see Tax Alerts No. 2/2022, 5/2022 and 7/2022).
The Inland Revenue Board (IRB) issued a media release dated 9 July 2022 announcing the following administrative requirements:
- Companies making payments to ADDs are required to compute the total WHT applicable for a specific month (i.e., on a monthly basis) and remit the accumulated amount to the IRB by the end of the following month. For example, the WHT for payments made to ADDs in August 2022 (i.e., from 1 August 2022 to 31 August 2022) must be remitted to the IRB latest by 30 September 2022.
- Companies are required submit the latest Form CP107D – Pin 2/2022 and Appendix CP107D(2) to the relevant IRB payment centres, by way of e-mail, before remitting the WHT. A copy of the e-mail must be presented to the payment centre for verification and checking purposes when the WHT payment is made.
The e-mail addresses of the respective payment centres are as outlined below:
- Kuala Lumpur payment centre: pbkl-cp107d@hasil.gov.my
- Kuching branch: pbkc-cp107d@hasil.gov.my
- Kota Kinabalu branch: pbkk-cp107d@hasil.gov.my