When a Malaysian business makes certain payments to non-residents, such as royalty payments, technical service fees or other payments subject to withholding tax, it may be required to deduct tax from the payment and remit it to the Inland Revenue Board of Malaysia (LHDN).
However, many business owners are unsure how to submit withholding tax payments online or whether they can enjoy a lower withholding tax rate through a Certificate of Residence (COR).
In this guide, we explain how to pay withholding tax through the MyTax portal, how to download your payment receipt and how a COR can help reduce withholding tax under a Double Taxation Agreement (DTA).
1. What Is Withholding Tax in Malaysia?
Withholding tax is a tax deducted at source by the payer when making certain payments to a non-resident recipient.
Instead of the non-resident receiving the full payment and settling the tax independently, the Malaysian payer is responsible for deducting the applicable tax and paying it directly to LHDN.
Common types of payments that may be subject to withholding tax include:
- Rental of movable property: Payments for the use of movable property owned by non-residents.
- Technical service fees: Payments for certain technical, management or other services provided by non-residents.
- Rental of movable property: Payments for the use of movable property owned by non-residents.
The applicable withholding tax rate depends on the nature of the payment and the relevant provisions of the Income Tax Act 1967. A Double Taxation Agreement (DTA) may also provide a reduced rate, subject to the applicable conditions.
2. How to Pay Withholding Tax via the MyTax Portal (Step-by-Step Guide)
Businesses can submit and pay withholding tax electronically through the e-WHT service available on the MyTax Portal.
Follow these steps to complete your payment.
Step 1: Log in to the MyTax portal
Visit the official MyTax portal: https://mytax.hasil.gov.my
Select your identification type, enter your identification or tax reference number, and key in your password to log in.
Step 2: Access the e-WHT service
Once you have succesfully logged in, you will be directed to the MyTax dashboard.
Navigate to Perkhidmatan ezHasil and select e-WHT to access the electronic withholding tax service.
Step 3: Select the relevant withholding tax form
Choose the appropriate withholding tax form based on the nature of the payment.
For example, CP37 is used for royalty payments under Section 109 of the Income Tax Act 1967.
Make sure select the correct form before proceeding.
Step 4: Enter then payer’s information
Fill in the particulars of the payer, including the relevant income tax reference number.
Check that the information displayed in the system in accurate before moving to the next section.
Step 5: Enter the recipient’s information
Provide the particulars of the non-resident to whom the payment is made or credited.
Ensure that the recipient’s details are correct and consistent with the supporting documents.
Step 6: Complete the deduction details
Fill in the required particulars of the withholding tax deduction, including the relevant payment and tax infromation.
Review all the details carefully before submitting.
Step 7: Save and generate the bill number
Once all the required information has been completed, click Save, followed by Generate Bill Number.
Review your information carefully before generating the bill number. According to the e-WHT process, further amendments cannot be made once the bill number has been generated.
Step 8: Make the withholding tax payment
After generating the bill number, select your preferred payment method.
You may choose:
- ByrHASiL: Make an online payment through FPX.
- LHDN Payment Counter: Proceed with the applicable counter payment process.
If you choose ByrHASiL, check the payment details and click FPX to proceed with the online banking transaction.
Follow the instructions to complete your payment.
3. How to Download your Withholding Tax Payment Receipt
After completing the payment, remember to download and retain your official payment receipt for future reference.
Follow these steps:
Step 1: Return to your MyTax dashboard and click Payment Statement.
Step 2: Select Seksyen 109 to view the withholding tax payment status.
Step 3: Locate the relevant transaction and click on the Receipt No to view and downlaod your payment receipt.
Keep the receipt together with the relevant invoices, payment records and supporting documents for future tax compliance purposes.
4. What Is a Certificate of Residence (COR)?
A Certificate of Residence (COR), also known as a Tax Residency Certificate (TRC), is an official document issued by a country’s tax authority to confirm that an individual or company is a tax resident of that particular country.
In Malaysia, a COR is relevant when a Malaysian business makes payments to a non-resident and the recipient wishes to enjoy tax benefits under an applicable Double Taxation Agreement (DTA).
For example, if your Malaysian company pays royalty or service fees to an overseas company, the payment may be subject to Malaysian withholding tax.
However, Malaysia has entered into DTAs with various countries to prevent the same income from being taxed twice.
Under an applicable DTA, the withholding tax rate may be lower than the domestic tax rate, depending on the type of income and the treaty conditions.
The non-resident recipient may provide a valid COR issued by their country’s tax authority to the Malaysian payer as evidence of their tax residency.
This allows the Malaysian payer to assess whether the recipient qualifies for the relevant treaty benefits.
In simple terms, a COR helps establish the recipient’s tax residency so that the applicable DTA withholding tax rate can be considered.
5. How Does a COR Help Reduce Withholding Tax?
Let’s look at a simple example.
Suppose a Malaysian company pays RM10,000 in royalties to a company based in a country that has a DTA with Malaysia.
Under Malaysia’s domestic withholding tax rate, royalty payments are generally subject to 10% withholding tax.
However, if the relevant DTA provides a lower rate of 8%, and the non-resident recipient fulfils the treaty requirements and provides the necessary supporting documents, the reduced rate may apply.
| Description | Without DTA Relief | With DTA Relief |
| Royalty payment | RM10,000 | RM10,000 |
| Withholding tax rate | 10% | 8% |
| Withholding tax payable | RM1,000 | RM800 |
| Net payment to recipient | RM9,000 | RM9,200 |
In this example, the Malaysian company saves RM200 in withholding tax.
Note: This is an illustrative example only. The actual withholding tax rate depends on the relevant DTA, the nature of the income and whether all treaty requirements are satisfied. A COR alone does not automatically guarantee a reduced rate or exemption.
6. Where Can You Obtain a Certificate of Residence (COR)?
If you are making payments to an overseas service provider or digital platform, you may request its COR to verify its tax residency.
Some international companies make their COR documents available on their websites or through their tax documentation portals.
For example, you may be able to obtain tax residency certificates from companies such as:
- Meta (Facebook)
The availability of these documents depends on the company and the relevant tax year.
Make sure the COR covers the relevant period and identifies the correct legal entity receiving your payment.
If the overseas recipient does not provide its COR publicly, you may request the document directly from the company.
7. Important Things Businesses Should Remember
To avoid unnecessary tax complications, business owners should keep the following points in mind:
1. Identify whether the payment is subject to withholding tax
Not every payment made to an overseas company is automatically subject to withholding tax. The nature of the payment and relevant tax provisions must be considered.
2. Check whether a DTA applies
Malaysia has DTAs with various countries. Check whether the recipient’s country has an applicable agreement with Malaysia and whether the relevant income qualifies for treaty benefits.
3. Request the COR from the overseas recipient
Obtain the appropriate COR and supporting documents before applying a reduced treaty withholding tax rate.
4. Use the correct withholding tax form
Different types of payments may require different withholding tax forms. For example, royalty payments generally use CP37, while certain special classes of income use CP37D.
5. Keep all supporting documents
Maintain copies of invoices, payment records, COR documents, withholding tax forms and payment receipts for future reference and tax compliance purposes.
Conclusion
Paying withholding tax in Malaysia is now more convenient with the e-WHT service available through the MyTax portal.
At the same time, businesses making payments to overseas recipients should not overlook the potential tax benefits available under Double Taxation Agreements.
By obtaining the appropriate Certificate of Residence (COR), checking the applicable treaty provisions and completing the withholding tax payment correctly, businesses can better manage their tax obligations and avoid paying more tax than necessary.
When in doubt, consult a qualified tax professional to determine the correct withholding tax treatment for your business transactions.
References
- KTP & Company – Withholding Tax Payment via MyTax Portal
- SQL – How to Pay Withholding Tax?
- LHDN – FAQ on Double Taxation Agreements and Withholding Tax
- LHDN – Certificate of Residence
You’re welcome to join our community group to get exclusive and latest trend of business insight!
Want to learn more about managing your business structure the right way? 💼
Join our FREE webinar! We’ll walk you through compliance essentials and how to convert from Enterprise to Sdn Bhd with confidence.
For more details, feel free to WhatsApp us!
📲 WhatsApp: 018-7678055
1,500+ reviews with a 4.9-star rating on
