Withholding Tax on Rental Payments to Non-Residents (s.109B/s.4A)

Introduction

If you pay rent to someone who is a non-resident of Malaysia, you may be required to deduct withholding tax from the payment and pay it to HASiL. This article explains the basics of withholding tax on rental payments to non-residents under section 109B of the Income Tax Act 1967 (ITA 1967), in relation to special classes of income under s.4A.

Scope: s.109B and s.4A income

Rental payments to non-residents fall within the scope of withholding tax on special classes of income:

• s.109B ITA 1967 (using Form CP37D) applies to s.4A income — including technical fees, services, and rental of movable property.
• This is referred to in RU 6/2017 and Handbook C12020.

Who deducts and how

• Withholding tax is deducted by the resident payer from payments made to non-resident recipients.
• Payments are made through e-WHT (MyTax) since 1 September 2023 (mandatory), using the CP37 series of forms.

Important note: real property rent vs movable property rent

• Rent of real property is not within the s.109B scope above; refer to HASiL for the treatment of real-property rent.

Rates and forms

Frequently Asked Questions (FAQ)

Q. I rent from a non-resident landlord. What should I do? A. If the payment falls within the scope of s.109B (s.4A income), you as the resident payer must deduct withholding tax and pay it through e-WHT (MyTax) since 1 September 2023, using the CP37 series of forms.

Q. Is real property rent treated the same as movable property rent? A. Not necessarily. Rent of real property to non-residents has a different treatment compared to rent of movable property, and direct assessment of the non-resident landlord may also apply — these details are this item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Q. How do I make the withholding tax payment? A. Through e-WHT in the MyTax portal, which has been mandatory since 1 September 2023.

Q. Where can I check the current rates? A. Refer to the HASiL Withholding Tax page for current rates — specific rates must be verified this item still awaits official confirmation from HASiL — check again with HASiL before deciding.