On 12 January 2022, Lembaga Hasil Dalam Negeri (LHDNM) issued a Media Release on the implementation of a 2% withholding tax on payments by a paying company to agents, distributors, and dealers that are resident individuals who received RM100,000 or more in monetary and non-monetary payments in the preceding year.
The Government through the 2022 Budget Presentation has introduced section 107D, Income Tax Act 1967 (ITA 1967) which came into force on 1 January 2022, where every paying company is required to withhold a 2% tax for each cash payment made to its agents, distributors, and dealers, and to remit such tax to LHDNM within 30 days.
To ensure that all paying companies are able to make appropriate preparations and notifications to all agents, distributors, and dealers, LHDNM has deferred the implementation of the remittance of withholding tax under section 107D of ITA 1967 until 31 March 2022.
Accordingly, the paying company is allowed to remit the 2% withholding tax from 1 April 2022 onwards for the months of January to March 2022, without incurring any penalty.
LHDNM will issue the relevant Frequently Asked Questions (FAQs), which can be accessed from LHDNM Official Portal at www.hasil.gov.my.
Please click here for further details.