1. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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Latest Tax Updates
up to 18 December 2017
Represented by:
Hadey and Siti
2. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
1. Tax penalty on no return and incorrect return – 100%
2. Professional Visiting Pass (PVP)
3. Public Liability Insurance
4. Association Subscription Fees
5. Withholding tax
• Public entertainer
• Special class of income
• Royalty
Extra:
Recovery of tax owing to tax authorities
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3. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
New Penalty Regime
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Voluntary Disclosure /
Discovery
Period from the submission
deadline
Penalty Rate
Voluntary disclosure
before tax audit
≤ 60 days
< 60 days and ≤ 6 months
> 6 months
10%
15.5%
35%
Non-disclosure (Discovery during audit) 100%
(45% for 1st offence)
Voluntary
disclosure is not
allowed once
audit has
commenced
1st January
2018
4. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
IRB
Expatriate Services Division (ESD) / MyExpat system
Check expatriates’ income tax status before leaving M’sia
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Immigration
Department
*** have responsible to deduct the Monthly Tax Deduction (MTD)
Failure to do so, IRB would take action (Blacklisting, fines or imprisonment)
1st July
2017
Employer
Local Sponsor
(Deemed employer – S83(6)
Salary or related costs
Application (ie. Professional Visiting Pass (PVP))
5. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Tax deduction for secretarial fees & tax filing fees
P.U (A) 336/2014
LHDN Guideline (Issued : 08.02.2017)
LHDN Guideline Amendment (Issued : 25.09.2017)
* Fees for preparing the computation (incurred and paid) is now tax deductible
5
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6. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
IRB Tax Dialogue with MIA, MATA and CITM on 22.11.2016
* Take the issue – Public Liability insurance is NOT tax deductible.
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Public Liability Insurance
Association Subscription Fees
IRB Internal Memo
* Association subscription fees (ie. The Japanese Chamber of Trade & Industry / The Chinese
Chamber of Commerce & Industry) is NOT tax deductible.
7. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
• Section 4A and 15A were introduced
• Payment to NR under Section 4A(i), 4A(ii) & 4A(iii) is subject to WHT
• Section 15A was amended
• Payment to NR for services performed outside Malaysia is not subject to WHT
• Practice Note 1/2017 - Payment to NR is subject to WHT irrespective of where the
services are performed.
• Practice Note 2/2017 - Impact on existing DTA (ie. Singapore, Spain and etc)
• Practice Note 3/2017, Exemption Order (No.9) 2017 - Payment to NR under Section 4A(i)
and 4A(ii), and services performed outside Malaysia is not subject to WHT
S109B – Withholding tax on Special classes of income
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21 October 1983
21 September 2002
17 January 2017
23 June 2017
6 September 2017
8. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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S109A
Withholding tax on Public Entertainer
The definition of “public entertainer” has been widened to include “a compere,
model, circus performer, lecturer, speaker”
Further to the widening of the definition of public entertainer, the IRB has issued
the Public Ruling No 6/2017 on “Withholding Tax on Income of a Non-
Resident Public Entertainer” which provide further clarification and guidance.
17th January
2017
9. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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S109
Withholding tax on Royalty
The definition of “Royalty” has been widened to include the use of or the right to use
“software”
∴ Any payment for the use of software to non-resident is subject to Withholding tax
17th January
2017
10. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Recovery of tax owing to the tax authorities
Prime Minister wants IRB to improve/optimize tax collection
Therefore,
1. Block to leave M’sia under S104 (ITA 1967) / S22 (RPGTA 1976)
2. Garnishee Order – 49 rule 1(1) of the Rules of High Court 1980
▪ Made by court, allow creditor to recover the debt from
➢ Debtor’s bank account
➢ Debtor’s wages
➢ People who owe money to debtor (ie. IRB can directly collect your rental from your tenant)
3. Writ of seizure and sale
4. Bankruptcy
10
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11. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Penalty for withholding tax
❖ Effective with 17th January 2017
❖ 10% penalty on whole amount owed if a company gets caught non
complying with withholding tax
❖ Cost will be 100% add back
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12. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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Public Entertainer
13. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Public Entertainer – Section 2(1)
❖ A compere, model, circus performer, lecture, speaker, sportsperson,
an artiste or individual exercising any profession, vocation or
employment of similar nature
❖ Individual who uses his intellectual, artistic, musical personal or
physical skill or character – in carrying out any activity in connection
with any purpose through live, print, electronic, satellite, cable, fibre
optic or other medium, for film or tape or for television or broadcast
Public Entertainer
15% 10%
Open to the public Specific group
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14. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Photo-shoot modelling
❖ Fee received by the models for the photo shoot is considered a
special class of income for commercial
❖ The fee would be subject to WHT Section 109B ITA 1967
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15. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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Special Classes of Income
16. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Special classes of income
❖ Section 4A (i) ITA 1967
❖ The use of property or rights belonging to him
❖ The installation or operation of any plant, machinery or other
apparatus purchased from him
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17. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Special classes of income
❖ Section 4A (ii) ITA 1967
❖ Technical advice, assistance or service rendered in connection
with technical management / administration
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18. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Special classes of income
❖ Section 4A (iii) ITA 1967
❖ Rent / other payment made under any agreement to non resident
– use of any moveable property
❖ Case law - DGIR v Alam Maritim Sdn bhd
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19. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
DGIR v Alam Maritim Sdn Bhd
Facts of the case
❖ Alam Maritim (M) Sdn Bhd (the taxpayer) entered into contracts with
Singapore non-resident companies (the non-resident companies)
operating the business of time charter of ships and crew
❖ The taxpayer made payment in full to the non-resident companies for
the time charter services rendered
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20. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
DGIR v Alam Maritim Sdn Bhd
Characterisation of payment
❖ Taxpayer view - the payments of the chartered fees is business
income of the non-resident companies and were taxable in their
country of residence
❖ IRB view – the fees are paid for charter of ships – income received
from movable properties and subject to WHT.
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21. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
DGIR v Alam Maritim Sdn Bhd
Federal Court decision
❖ DGIR found that the payments made by the taxpayer to the non-
resident companies
❖ “special classes of income” under s 4A(iii) of the Income Tax Act
1967 (the Act) and was thus subject to withholding tax under s
109B of the Act
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22. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Implication of this latest amendment
❖ Payment made to non resident in respect of the provision of
technical service performed in or outside Malaysia and rental of
moveable property is subject to a 10% WHT
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23. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Practice Note 1/2017
❖ Guidance on the implementation of the amendment to Section 15A
of the ITA 1967
❖ Expanding the scope of WHT
❖ Effective date of 17th January 2017
❖ The effective date is refer to the date service are performed
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24. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Practice notes 1/2017
Signed and performed outside Malaysia Withholding Tax
> 17 January 2017
> 17 January 2017
/
< 17 January 2017
< 17 January 2017
X
< 17 January 2017
> 17 January 2017
/
Services performed
outside Malaysia
Payment date Withholding Tax
< 17 January 2017 > 17 January 2017 ?
> 17 January 2017 < 17 January 2017 ?
X
X
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25. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
❖ Re-imposition of withholding tax on offshore services
❖ Confirmed the Double Taxation Agreement (DTA) with other
countries
Contracting States Implication
Singapore Payment for services performed outside
Malaysia are not subject to withholding taxSpain
Australia Payments for services are not subject to
withholding taxTurkmenistan
Practice Notes 2/2017
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26. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Double Taxation Treaties
❖ To apply for lower rate stated in DTA the payer need to provide
Certificated of Resident (payee)
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27. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
❖ Exemption order (W.E.F 6th September 2017)
❖ Any income from services which fall under paragraphs 4A(i) & 4A
(ii) of the ITA 1967 - not subject to WHT Section 109B if such
service are performed outside Malaysia
Practice Notes 3/2017
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28. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Practice Notes 3/2017
Signed & performed outside Malaysia Withholding Tax
> 6 September 2017
> 6 September 2017
X
< 6 September 2017
< 6 September 2017
/
< 6 September 2017
> 6 September 2017
X
Signed & performed
outside Malaysia
Payment date Withholding Tax
< 6 September 2017
< 6 September 2017
> 6 September 2017 ?
< 6 September 2017
> 6 September 2017
< 6 September 2017 ?
/
X
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29. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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Royalty
30. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Redefinition of “royalty”
❖ Effective January 2017 the definition of “Royalty” has been widened
to include
❖ the use of or right to use software;
❖ the receipt of or the right to receive visual images or sounds transmitted to the
public by satellite or cable, fibre optic or similar technology;
❖ the use of or the right to use visual images and/or sound in connection with
broadcasting by satellite or cable, fibre optic or similar technology;
❖ the use of or the right to use some or all of licensed radio frequency spectrums;
and
❖ the total or partial forbearance in respect of the use of or rights covered by the
royalty definition.
❖ Final withholding tax of 10%
❖ Reduced rate of 8 % for certain Double Taxation Agreement (DTA)
country
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31. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
Digital advertising
❖ Does digital advertising fall under “ payment for service”?
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32. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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32
Type of income Forms for withholding tax
Contract payments CP37A
Royalty CP37
Interest CP37
Special classes of income CP37D
Casual income CP37F
33. Contents of this presentation are adapted from the current of legislation at the time of presentation. No person should rely
on the content of this publication without first obtaining professional advice. We, KTP or THK, shall expressly disclaim all and
any liability and responsibility to any person in reliance in whole or any part of this contents.
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Thank You
