Frequent Ask Questions (FAQs) About Withholding Tax

Withholding Tax is the tax that withheld by a payer (tax resident) to be submitted to LHDN for a payment made to a payee (non-tax resident), including media fees, services provided, or royalties fees.

No, withholding tax is not deductible for tax. However, the expenses that have paid for the Withholding Tax are tax deductible.

Yes, because Facebook / Google is non-tax resident.

It depends on the Certificate of Residence (COR) of the payee. Facebook and Google are an Ireland tax resident and a Singapore tax resident respectively. Hence, according to the Double Taxation Agreement (DTA), the Withholding Tax rate is 8% for both of the countries.

COR is a document to confirm the residence status of the payee (non-tax resident). Payer (tax resident) needs to attach the COR when submitting Withholding Tax to LHDN, in order to get tax benefits. Otherwise, a 10% Withholding Tax rate will be levied.

Section 109 – Royalty

• The payer purchases or uses the application to create its own series of advertisement on it.

 

Section 109B – Special Classes of Income 

• The payer does not purchase or use any application, and only engage the services provided by the payee for advertising.

You may refer to our guidance：https://youtu.be/Ryg9e11_t7k

The payer (tax resident) need to pay Withholding Tax to the LHDN within 1 month from the date of payment to payee (non-tax resident).

If the payer (tax resident) unable to pay the Withholding Tax on time, it will be charged for a 10% penalty (based on the total amount that need to be paid for Withholding Tax).