With effect from 1 January 2022, companies are subjected to 2% withholding tax if they make payments to their respective authorized agents, dealers, or distributors (ADDs). These payments are associated with the sales, transactions, or schemes conducted by ADDs.
The companies are bound to pay the withholding tax if the ADDs are resident individuals who have obtained payments in monetary or any other form that exceeds RM100,000. The payment should be made to the same company in the preceding year of assessment.
The remittance of this withholding tax should be made to the “Director General of the Inland Revenue Board” within 30 days of crediting or paying the ADDs.
On 12 January 2022, the Inland Revenue Board made an announcement through a media release. According to this announcement, the remittance of withholding tax should be considered deferred until 31 March 2022.
Hence, when applicable, companies are therefore directed to remit the withholding tax on the payments made to ADDs from January 2022 to March 2022.