LHDN Official Clarification: 2% Withholding Tax under Section 107D No Longer Applies to Deceased Agents/Distributors
On 30 June 2025, the Inland Revenue Board of Malaysia (LHDN) released an official clarification stating that Section 107D of the Income Tax Act 1967 does not apply to deceased agents, distributors, or dealers (EPP – resident individuals).
Here’s What You Need to Know:
It requires companies to withhold 2% tax from payments made to resident individuals (EPPs) acting as agents, distributors, or dealers.
LHDN clarified that a “person” only refers to a living individual.
If the EPP is deceased, they are no longer considered a “person” under this section — so the 2% withholding tax no longer applies.
Effective 1 August 2025, any payments made to deceased EPPs will:
- No longer be subject to 2% withholding tax
- Not be collected by LHDN
All income received after the EPP’s death must be reported by the executor, administrator, or legal beneficiary of the estate through a Harta Pusaka / TP tax file.
Submit Form CP57 (Notification of Deceased Taxpayer)
Include the following supporting documents:
• A copy of the death certificate
• A copy of the grant of probate or letter of administration
Important Reminder for Companies and Estate Representatives:
Make sure to understand and comply with this latest directive from LHDN when handling payments to deceased agents or distributors, to ensure full tax compliance.
**Last updated until 1/7/2025
(201706002678 & AF 002133)