Withholding Tax

29.09.17

After nine months of continuous efforts by MGCC, together with AMCHAM, EUMCCI as well as other Chambers and business associations, various ministerial meetings and round-tables, we are delighted to announce a resolution for issues arising from the Withholding Tax as revised in the 2017 Budget.

Minister of Finance II, YB Datuk Seri Johari bin Abdul Ghani will be issuing a ministerial exemption. The effective the date for the relief will be 6 September 2017- we have been told.

The exemption will provide total relief for services performed overseas; the law, however, will remain on the books.

  • Companies must retain specific records and documentation as it pertains to these services performed abroad. These records must be made available if and when LHDN chooses to review them in the future.
  • It is also noted that this exemption is only provided for via ministerial exemption, there will be no change to the law in general.
  • For any company that has already applied and received an exemption, this will be honoured. Everyone else must pay the tax as defined by the law until the date this relief is specified when gazetted (expected to be 6 September 2017). If a company’s application for exemption is still pending, they can appeal on the same criteria as before, to have the relief applied from January 17, 2017, and it will be given due consideration.

We also understand that the Ministry of Finance is undertaking a study on the digital economy and will issue separate tax regulations.

Contributions by our members were instrumental especially in providing information in a timely fashion. I would like to thank all that actively participated for their time and contribution.

Details of the exemption will be gazetted and posted to the MoF website once it clears the AGs office.