The Inland Revenue Board (IRB) has announced that, starting 1st January 2025, the electronic submission of the Section 107D Payment Form (e-107D) .
In a statement today, the IRB said that the submission of payment information to agents, dealers, or distributors (resident individuals) under Section 107D of the Income Tax Act 1967 was previously conducted manually.
In view of this mandatory implementation, taxpayers are required to submit Form CP 107D online using the e-107D method provided,” it said.
According to the IRB, Section 107D tax deduction payments must be made electronically using a bill number.
Payments can be completed either through the ByrHASiL platform at https://byrhasil.hasil.gov.my/HITS_EP/ or via the Financial Process Exchange (FPX) through the ByrHASiL link.
• The WHT is not applicable on payment by way of credit note, contra-transaction and discount given to an agent, dealer or distributor.
• The payer company is required to apply the WHT even though the agent, dealer or distributor is subject to CP500 tax instalment payment.
• The category of individual includes sole proprietor and individual partner in a partnership. However, it excludes payment made to a partnership or a Limited Liability Partnership.
• The threshold amount of RM100,000 in the preceding year is to be determined each year. In determining the applicability of section 107D, the residency status of the agents, dealer or distributor in the immediate preceding year is irrelevant
• The preceding year RM100,000 threshold value is to be tested each year (not on a one-off basis) in order to determine whether withholding tax will apply for payment made in the current year.
• The agent, dealer or distributor must have an income tax reference number.
• The 2% WHT amount is to be reported in Form CP58.
• The 2% WHT will be considered as part of the payment for the balance of tax to be paid, upon submission of the income tax return form for the relevant YA by the agent, dealer or distributor.
• The WHT shall be remitted to the IRBM within 30 days after paying or crediting such payments to the agent, dealer or distributor. Remittance is to be made together with Form CP107D.
• If there is a failure to make the WHT payment to the IRBM within the stipulated time, a penalty of 10% would be imposed on the unpaid withholding tax. In addition, the tax deduction for the gross amount of the payment made to agent, dealer or distributor will be disallowed.
• Where a company is making payments to several agents, the company may complete the details of payment for each agents in the appendix [Lampiran CP107D(1)], which is to be attached together with the WHT remittance form [CP107D]. Each appendix could cater up to 20 recipients.
• The amended Form CP58 will include section to report the WHT deducted.
• The WHT remittance form and appendix as well as the updated Form CP58 have yet been released by the IRBM.
• The WHT can be made at the IRBM Service/Payment Counters.
• 10% penalty if the payer fails to remit 2% to IRB within 30 days
• Commission is not allowed for tax deduction
Source
IRBM has issued a Frequently Asked Questions (FAQ) dated 28 February 2022 (only available in Bahasa Malaysia) on the application of the above Section 107D.
https://phl.hasil.gov.my/pdf/pdfam/Soalan_Lazim_Seksyen_107D_ACP_1967.pdf
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