2% Agent Commission Withholding Tax
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About 2% Agent Commission Withholding Tax
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| A 2% Withholding Tax (WHT) will be imposed to agents, dealers or distributors whose commission exceed RM100k within 1 year. Besides, LHDN has deferred the remittance of WHT until 31.03.2022.
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| According to the latest FAQ, the company has to email Form CP107D to LHDN before payment made and agents must have a tax number. We have compiled some FAQs about Withholding Tax, let’s take a look!
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| For more information, leave your message to us now.
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FAQ (Updated until July 2022):
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| 1. What kind of income is subjected to WHT?
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| All types of payments, such as commissions and incentives in the form of cash, arising from sales, transactions or programs made by the agents/wholesalers/suppliers.
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| 2. How is the RM100k threshold assessed?
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- By company:
- Agent A received RM108k commission from Company A and RM90k commission from Company B last year. In this year, agent A need to contribute 2% WHT in Company A, but no need to contribute in Company B.
- By year:
- If Agent B reaches the RM100k threshold in 2022, he needs to contribute WHT in 2023.
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| 3. When does the company need to pay WHT?
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- The 2% WHT must be remitted to the LHDN before the end of next month.
- For example, if the payment date is July 2022, the deadline for remittance to LHDN is 31.08.2022.
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| 4. How is the deferred payment implemented?
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| During deferment period (01.01.2022 – 02.03.2022), the companies are allowed to pay the withholding tax latest by 01.04.2022. details:
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- WHT deducted during 01.01.2022 – 02.03.2022 shall be remitted before 01.04.2022.
- WHT deducted after 03.03.2022 shall be remitted within 30 days after paying the commission to agents.
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| 5. Does the company need to do any declaration?
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| Company needs to make a declaration before payment made via CP107D & Appendix CP107D (2) (each appendix limits to 20 agents).
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| Email address of LHDN branches:
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| Kindly take note:
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- The company needs to submit declaration for all eligible agents.
- Both Forms have been updated in July 2022!
- Both Forms have to be e-mailed to related branches before payment made
- Only e-mail to the branch that you will make payment to
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| 6. What is the payment method of WHT?
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Payment can be made by postage or at the LHDN service counters together with the copy of CP107D & CP107D (2).
(Counter available for WHT payment: LHDN Kuala Lumpur, LHDN Kuching, LHDN Kota Kinabalu)
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| 7. Do agents need to have an income tax number?
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| Yes. If they do not have an income tax number, they can register through e-Daftar.
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| 8. Does the company need to declare 2% WHT in CP 58?
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| Yes. The updated CP 58 will allow companies to declare WHT.
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| 9. Does this 2% WHT still apply if agents submitted Form CP500?
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| Yes
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| 10. If commission of Dec 2021 is made in Jan 2022, is it eligible for WHT?
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- Commission received in Jan 2022 will be declared in CP 58 2022.
- If the total commissions amount in 2021 exceeds RM100k, a 2% tax reduction will be required in 2022.
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| 11. Consequences of failure in remitting WHT:
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- If the company fails to remit the 2% withholding tax to LHDN within the time given, late payment penalties (10% of the unpaid tax) will be imposed.
- The company’s expenses are not allowed to be tax deductible.
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| Contact us if you have any problems!
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