Malaysia: Withholding tax, royalty and service fee payments to non-residents

Malaysia: Withholding tax, royalty and service fee

The Finance Bill 2016 was passed by the Dewan Rakyat on 23 November 2016 and includes significant changes to the Malaysian withholding tax treatment of royalty and service fee payments made to non-residents.

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The amendments include:

  • A significant expansion of the definition of “royalty” to include payments for the use of, or the right to use, or the alienation of software among other items
  • The imposition of withholding tax on services rendered by non-residents, regardless of whether such services are rendered within or outside Malaysia

The proposed changes, if enacted into law, are expected to be effective in late 2016 or early 2017.

 

Read a December 2016 report [PDF 74 KB] prepared by the KPMG member firm in Malaysia

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