It is also a “sweeper clause” introduced by the government to deal with taxable income that is otherwise not covered by the Income Tax Act. On May 2, 2009, Amir Aziz went to Singapore and presented him with a cheque for RM36,900, after deducting the withholding of RM 4,100 for 10% of the gross commission of RM 41,000 for the introduction of a buyer for him [for example: ABC Sdn Bhd bought a special machine from JPCorp, a Japanese company. As part of the agreement, JP Corp 3 sent engineers to Malaysia to help install the machine and calculated RM100,000 for installation services. The installation tax of RM100,000 is subject to the Malaysian withholding of 10%. ABC Sdn Bhd is required to withhold RM10,000 as a tax (to be paid to IRBM), and JP Corp would be paid RM90,000. Costs and refunds (airfare, local accommodation, food and related expenses) are subject to the 10% Malaysian withholding tax. The removal of the above-deleted reserve effectively means that payments made by malaysian residents to non-residents for technical services provided both onshore and offshore are subject to withholding tax under Section 109B of the Income Tax Act. This includes situations in which the non-resident does not have a stable settlement in Malaysia, which may, in some cases, result in double taxation if the convention does not contain a specific article for “technical fees/technical services”. (f) Aziz`s obligation to pay arises at the time of signing the purchase and sale agreement. The gross commission collected by Aziz is subject to the 10% withholding tax in accordance with THE ITA`s S.4 (f) and S.109F. Example: Amir, a businessman in Kuala Lumpur, owns a bungalow in Johor Bahru that had been empty for a year.
His former schoolmate Aziz, a full-time retiree living in Singapore, has a neighbour who is looking for a house in Johor Bahru to buy for investment. That`s why Aziz introduces his neighbor Amir and his neighbor contacts Amir to inquire about his empty bungalow. On February 10, 2009, a sales contract was signed and the bungalow sold for RM 1.5 million to Aziz`s neighbour. As a general rule, anyone who makes certain payments, such as royalties, interest, contracts, payments, remuneration to a public artist, technical and administrative expenses to non-residents, is required to transfer the tax deducted at an applicable rate (i.e. withholding tax) within one month from the date of payment or credit to the Malaysian National Revenue Council (IRBM), depending on the date on which this tax is previously. Section 6 of the Finance Act 2017 repeals the provisions relating to the entry into force of the 2017 Finance Act contained in the s15A of the Income Tax Act. The Finance Act 2017 received royal approval on January 9, 2017 and was published on January 16, 2017. In short, the reserve had limited withholding tax to services provided by non-residents in Malaysia (i.e. onshore). This is the practice of the IRBM, in which the sponsor of the non-resident public artist is required to pay the 15% withholding tax before he can obtain an entry permit for the non-resident public artist from the Immigration Office. In summary, the following types of payments may be attracted when they are paid to non-resident companies/persons: the extension of the definition of royalties, which includes payment or the right to use software (as of January 17, 2017), could be suspended from withholding: – payment of software and applications (including purchase price, annual fee and access tax) to foreign suppliers; – payment for software or applications downloaded from the internet and payment to an underwater supplier; and – payment for online advertising and marketing services (where there is the use of software or applications).