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Details of 2% Agent Commission Withholding Tax

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.

According to the latest FAQ, the company has to declare Form CP107D to LHDN and agents must have a tax number.

We have compiled some FAQs about Withholding Tax, let’s take a look!

FAQs

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.

The threshold is assessed by company and year:

  1. 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.
  2. By year: If Agent B reaches the RM100k threshold in 2022, he needs to contribute WHT in 2023.
  • The 2% WHT must be remitted to the LHDN within 30 days of payment to the agents.
  • For example, if the payment date is 15.04.2022, the period for remittance to LHDN is 16.04.2022 to 15.05.2022.

During deferment period (01.01.2022 – 02.03.2022), the companies are allowed to pay the withholding tax latest by 01.04.2022. details:

  • 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.

Payment can be made by postage or at the LHDN service counters:

  • LHDN Kuala Lumpur
  • LHDN Kuching
  • LHDN Kota Kinabalu

Company needs to make a declaration via:

  • CP107D & Appendix CP107D (1) (each appendix limits to 20 agents).

Note: The company needs to submit declaration for all eligible agents.

Yes. The updated CP 58 will allow companies to declare WHT.

  • 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.
  • 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.