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Details of 2% Agent Commission Withholding Tax

Posted LnCoadmin

A 2% Withholding Tax (WHT) will be imposed to agents, dealers or distributors whose commission exceed RM100k within 1 year. Besides, LHDN has deferred the remittance of WHT until 31.03.2022.

According to the latest FAQ, the company has to email Form CP107D to LHDN before payment made and agents must have a tax number.

We have compiled some FAQs about Withholding Tax, let’s take a look!

FAQs （Updated until July 2022）

1. What kind of income is subjected to WHT?

All types of payments, such as commissions and incentives in the form of cash, arising from sales, transactions or programs made by the agents/wholesalers/suppliers.

2. How is the RM100k threshold assessed?

The threshold is assessed by company and year:

  1. By company: Agent A received RM108k commission from Company A and RM90k commission from Company B last year. In this year, agent A need to contribute 2% WHT in Company A, but no need to contribute in Company B.
  2. By year: If Agent B reaches the RM100k threshold in 2022, he needs to contribute WHT in 2023.

3. When does the company need to pay WHT? (Updated on July 2022)

  • The 2% WHT must be remitted to the LHDN before the end of next month.
  • For example, if the payment date is July 2022, the deadline for remittance to LHDN is 31.08.2022.

4. How is the deferred payment implemented?

During deferment period (01.01.2022 – 02.03.2022), the companies are allowed to pay the withholding tax latest by 01.04.2022. details:

  • WHT deducted during 01.01.2022 – 02.03.2022 shall be remitted before 01.04.2022.
  • WHT deducted after 03.03.2022 shall be remitted within 30 days after paying the commission to agents.

5. Does the company need to do any declaration? (Updated on July 2022)

Company needs to make a declaration before payment made via:

  • CP107D & Appendix CP107D (2) (each appendix limits to 20 agents).

 

Email address of LHDN branches
Pusat Bayaran Kuala Lumpur pbkl-cp107d@hasil.gov.my
Cawangan Kuching pbkc-cp107d@hasil.gov.my
Cawangan Kota Kinabalu pbkk-cp107d@hasil.gov.my

Kindly take note:

  1. The company needs to submit declaration for all eligible agents.
  2. Both Forms have been updated in July 2022, you can download the latest form at Template Listing !
  3. Both Forms have to be e-mailed to related branches before payment made
  4. Only e-mail to the branch that you will make payment to

6. What is the payment method of WHT? (Updated on July 2022)

Payment can be made by postage or at the LHDN service counters:

  • LHDN Kuala Lumpur
  • LHDN Kuching 
  • LHDN Kota Kinabalu

*Payment should be submitted together with the copy of your e-mail content for easier checking

7. Do agents need to have an income tax number?

  • Yes. If they do not have an income tax number, they can register through e-Daftar.
  • You may refer to our personal income tax number for registration guidance.

8. Does the company need to declare 2% WHT in CP 58?

Yes. The updated CP 58 will allow companies to declare WHT.

10. If commission of Dec 2021 is made in Jan 2022, is it eligible for WHT?

  • Commission received in Jan 2022 will be declared in CP 58 2022.
  • If the total commissions amount in 2021 exceeds RM100k, a 2% tax reduction will be required in 2022.

11. Consequences of failure in remitting WHT.

  • If the company fails to remit the 2% withholding tax to LHDN within the time given, late payment penalties (10% of the unpaid tax) will be imposed.
  • The company’s expenses are not allowed to be tax deductible.