Withholding Tax Exemption on Offshore Services

Following various feedback sessions and consultations with the business chambers and industry players, the Minister of Finance (MoF) has agreed to grant withholding tax exemption on payments to non-residents that fall within Section 4A(i)/(ii) in respect of offshore services via the Income Tax (Exemption) (No. 9) Order 2017.

The Order is deemed to have come into operation on 6th September 2017. It is expect that the Malaysian Inland Revenue Board (MIRB) would provide clarification as to what 6 September 2017 means, whether it refers to the date services are rendered or payments are made.  Clarification is also made as to what would be the WHT tax liability to affected companies in the period 17th January 2017 and 6th September 2017.

Given the above, please note that taxpayers are required to maintain sufficient records (information and documents) to substantiate that the services, advice and assistance specified in Section 4A(i) and (ii) were performed overseas and that the exemption applies to them.

Source: EU-Malaysia Chamber of Commerce & Industry