PR 1/2010 Withholding Tax on Income under Paragraph 4(f)

- Effective 01.01.2009 with the introduction of new section 109F of ITA

Criteria to determine a payment fall under Paragraph 4(f)
(a) the payment is revenue and not capital in nature;
(b) the payment is not income that falls under paragraphs 4(a) to 4(e) and section 4A of the ITA;
(c) the payment received by a non-resident person is in the nature of a miscellaneous income. Such income is often casual in nature. Casual income means an occasional income, which is received outside the ordinary course of trade or vocation;
(d) the payment is for an isolated transaction; and
(e) there is an absence of repetition of transactions to indicate the commercial nature of the transaction.

Gains or profits under Paragraph 4(f) of the ITA deemed to be derived from Malaysia irrespective of whether transactions are carried on in Malaysia or not

e.g. commission, guarantee fees

Form CP37F – Section 109F, ITA –Payment to a non-resident chargeable under Paragraph 4(f) ITA

PR 4/2005 Withholding Tax on Special Classes of Income

Special classes of income chargeable to tax
1. Paragraph 4(A)(i) of ITA - Services rendered in connection with the use or installation or operation of assets
a) Provision of personnel for advisory or supervisory services
b) Installation and commissioning services

2. Paragraph 4(A)(ii) of ITA - Technical advice, assistance or services rendered in connection with technical management or administration
a) Management or marketing services
b) Consultancy service
c) Legal services in connection with a debt or agency arrangement
d) Inter-company technical services
e) Specially-tailored training course
Form CP37D – Section 109B, ITA -Payment to a non-resident chargeable under Paragraph 4A

3. Paragraph 4(A)(iii) of ITA - Rent of other payment for use of moveable property
(for use of oil rigs, boats, ships, cars, aircraft or other equipment)
a) Slot hire
b) Leasing of ships
c) Time charter
d) Voyage charter

Income under Paragraph 4A(i) and 4A(ii) are deemed derived from Malaysia if such services are performed in Malaysia

2nd addendum to PR 4/2005 Withholding Tax on Special Classes of Income
w.ef. 01.01.2009 reimbursement or disbursement on hotel accommodation is not subject to withholding tax