25/08/2026
Withholding Tax (WHT) should not be checked only after receiving a notice from LHDN
When a business deals with overseas suppliers, contractors, or other non-residents, the key question is not only whether the payment has been made. The business must also check whether the payment is subject to Malaysian Withholding Tax (WHT).
Many companies record and pay these expenses as usual, but overlook the fact that different types of non-resident payments may carry different WHT obligations. By the time the accounts are reviewed later, the filing timeline may already have started.
Payments that should be reviewed for WHT include:
• Interest paid to non-residents
• Royalties paid to non-residents
• Contract payments made to non-resident contractors
• Technical or management fees paid to non-residents
• Rental of movable property paid to non-residents
• Payments made to non-resident public entertainers
• Income covered under Section 4(f) involving non-residents
• Other non-resident payments that may be subject to WHT under tax law
One of the most common WHT risks is the filing deadline.
In general, WHT should not be left until month-end, year-end, or annual tax filing season. The business needs to review the nature of the payment, the payment date, the crediting date, and the applicable filing timeline.
For the general WHT situations shown, the filing deadline is commonly counted within 1 month from the earlier of:
• Payment Date
• Crediting Date
This means the business should not assume that WHT is not relevant just because the amount has not yet been physically remitted to the non-resident. If the amount has already been credited in the accounts, the WHT timeline may already need to be considered.
Common WHT forms include:
• CP37 — Interest / royalties paid to non-residents.
• CP37A — Contract payments to non-resident contractors.
• CP37D / CP37D(1) — Technical or management fees / rental of movable property paid to non-residents.
• CP154 — Payments to non-resident public entertainers.
• CP37E — REIT / property trust fund distributions.
• CP37E(R) — Retail money market fund distributions to resident non-individual unit holders.
• CP37E(NR) — Retail money market fund distributions to non-resident non-individual unit holders.
• CP37E(T) — Family Fund / Islamic Family Fund / General Fund distributions.
• CP37F — Income covered under Section 4(f) of the Income Tax Act 1967.
• CP37G — Certain deferred annuity / private retirement scheme income.
WHT below RM500 does not automatically mean no action is needed.
For certain small WHT amounts that meet LHDN’s specific conditions, a special filing arrangement may apply. However, businesses should not treat “not exceeding RM500” as an automatic exemption. The payment type, applicable form, and qualifying conditions must still be reviewed before applying the correct filing cycle.
From a business management perspective, WHT control should start when each cross-border or non-resident payment is recorded. It should not be left until months later when the accountant has to trace everything from bank transactions. Payee details, invoices, contracts, service descriptions, payment dates, and crediting dates should be properly maintained so the correct WHT form and filing obligation can be determined on time.
For support with reviewing business accounts, non-resident payments, and related tax filing matters, enquiries can be made through 019-600 1645 with LB BUSINESS SOLUTIONS.
