Inside eNewsletter 04/2022, we will cover the following updates released by the Inland Revenue Board: -
- Frequently Asked Questions (FAQ) on the 2% Tax Deduction from Payments made to Agents, Dealers or Distributors
- Implementation of e-TT system for Telegraphic Transfer (TT) / Electronic Fund Transfer (EFT) and Interbank GIRO (IBG) payment method
Frequently Asked Questions (FAQ) on the 2% Tax Deduction from Payments made to Agents, Dealers or Distributors
On 28 February 2022, the Inland Revenue Board (“IRB”) has issued a FAQ on the 2% tax deduction from payments made to agents, dealers or distributors.
To recap, effective from 1 January 2022, payer company is required to remit 2% tax from the payments (in monetary form) made to its agents, dealers or distributors (“ADD”) arising from sales, transactions or schemes carried out pursuant to Section 107D of the Income Tax Act 1967 (“S. 107D”).
The 2% tax deduction is only applicable where payments are made to ADD who are Malaysian resident individuals and have received more than RM 100,000 of such payments (whether in monetary form or otherwise) from the same payer company in the immediately preceding year.
The 2% tax deducted has to be remitted to the IRB within 30 days from the date of payment to the agents, dealers or distributors. It was announced in the IRB’s Media Release issued on 12 January 2022 that the 2% tax deduction from payments made to ADD from January 2022 to March 2022 will be deferred until 31 March 2022. For further details, you may refer to our eNewsletter 03/2022.
We tabulate below the salient points of the FAQ:
Category | Qualifying conditions | |
---|---|---|
Meaning of “company” for the purpose of S. 107D | Pursuant to Section 2 of the Income Tax Act 1967, “company” means a body corporate and includes any body of persons established with a separate legal identity by or under the laws of a territory outside Malaysia and a business trust. | |
Type of payment subject to 2% tax deduction | All types of payments arising from sales, transactions or schemes carried out by ADD authorised by the payer company (i.e. commission and incentive received in cash) but excludes credit note, contra and discount. | |
Meaning of ADD for the purpose of S. 107D
| A Malaysian resident individual and also includes:
| |
Determination of the threshold value of RM 100,000 |
| |
Payment and reporting | by Payer company
For e.g. An ADD received commission of RM 80,000 from January to November 2021 and is eligible for commission of RM 25,000 for the month of December 2021 (paid in January 2022). It will result in the following: -
by ADD
| |
Deferment of payment and reporting |
|
Implementation of e-TT system for Telegraphic Transfer (TT) / Electronic Fund Transfer (EFT) and Interbank GIRO (IBG) payment methods
On 3 March 2022, the IRB has issued a Media Release on the implementation of e-TT system for TT / EFT and IBG payment methods. This new system (known as e-TT system) will be effective from 1 April 2022.
The e-TT system will be catered for taxpayers who wish to make payment on the following tax through TT, EFT or IBG methods within and outside Malaysia: -
- Income Tax;
- Petroleum (Income Tax);
- Real Property Gains Tax (RPGT);
- Compound Payment;
- Income tax paid by Foreign Artist (Public Entertainer); and
- Withholding Tax (WHT).
Except income tax and petroleum tax, other taxes as abovementioned can only be paid manually at HASiL Payment Counters at this juncture.
Steps to access the e-TT system
- Visit the My Tax Portal at https://mytax.hasil.gov.my;
- Click on ezHasil Services > submenu e-TT;
- Fill up the required payment information to generate the Virtual Account (VA) number;
- Use the VA number as payment account number (i.e. payment identification) when making payment through TT at the bank counter or electronic banking portal or Automated Teller Machine (ATM). Payment in cash and cheque is not allowed at the bank counter.
Taxpayers may contact IRB via the following methods for further information on the new e-TT system:
- Hasil Care Line at 03-8911 1000 / 603-8911 1100 (Overseas);
- HASiL Live Chat; or
- Feedback Form at https://maklumbalaspelanggan.hasil.gov.my/MaklumBalas/en-US/