Withholding on technical services

The situation

Payments to non-residents for technical advice or services under s109B are subject to 10% withholding tax, subject to treaties.

The law

• Sec 109B, Income Tax Act 1967: Special classes of income (technical advice, services, rent of movable property) to non-residents: 10%

What it means for you

Example: fee RM50,000: withhold RM5,000. Where services are performed outside Malaysia, check whether they fall in scope. Some treaties change the outcome.

What to do

1. Check where services were done.
2. Check the treaty.
3. Withhold 10% and file CP37D.
4. Pay within one month.

Related

• Royalty withholding tax
• Treaty rate for withholding
• Who bears withholding tax
• Contract payment to non-resident contractor
• Services performed outside Malaysia
• Interest to non-residents