TaxSavvyMY

Late withholding tax payment

We paid WHT three months late. What now?

The situation

WHT not paid on time is increased by 10% of the unpaid amount.

The law

  • Sec 109B, Income Tax Act 1967: Special classes of income (technical advice, services, rent of movable property) to non-residents: 10%
  • Sec 39(1)(f), Income Tax Act 1967: No deduction for payments where withholding tax was not paid

What it means for you

Example: WHT RM5,000 late: increase RM500. Until paid, the expense can be disallowed. Pay both and keep receipts for the tax return. The increase is on the unpaid WHT, not on the expense. The deduction can be restored once WHT and the increase are paid, subject to LHDN rules on timing.

What to do

  1. Pay WHT now.
  2. Pay the 10% increase.
  3. Keep receipts.
  4. Claim the deduction.

We can do this for youWithholding tax on payments to non-residents: MYR 350

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