Income Tax for Agents & Commission: A Complete Guide

Is commission taxable?

Commission is income, and income is generally subject to income tax in Malaysia. How it is reported depends on the type of relationship you have with the party paying the commission:

• Independent agents carrying on business activities → business income (s.4(a) ITA).
• Employees receiving commission in an employer-employee relationship → employment income (s.4(b)/s.13 ITA).

Source: HASiL — T2025 Tax Responsibilities of Individuals (Business); Form BE Explanatory Notes (eBE2026); T2026 Smart Taxpayers e-B (see Official sources section).

Independent agents: business income (s.4(a))

HASiL recognises insurance, property and travel agents as business activities. If you are self-employed as an agent — an agent-principal relationship — your commission income is classified as business income under s.4(a) ITA and is reported in Form B (deadline 30 June; e-B 15 July).

To distinguish an independent agent from an employee, look at factors such as the level of control, risk and the use of your own equipment — a master-servant relationship indicates employment, while agent-principal indicates a business.

Source: HASiL — T2025 Tax Responsibilities of Individuals (Business); T2026 Smart Taxpayers e-B (see Official sources section).

Employees receiving commission: employment income (s.4(b)/13)

If you receive commission in an employment relationship (e.g. a salaried salesperson), the commission is included in gross employment income under s.13(1)(a) ITA. It is reported as employment in Form BE (deadline 30 April; e-BE 15 May), included in Form EA, and subject to PCB.

Source: HASiL — Form BE Explanatory Notes (eBE2026); T2025 Tax Responsibilities of Individuals (Business) (see Official sources section).

Note: occasional commission without business characteristics may fall under s.4(f) ITA — however, no official example was found at this review, so this article makes no specific claim about it. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Expenses claimable by agents

For business agents, expenses are claimable if they are wholly and exclusively incurred in producing the income (s.33(1) ITA) within the basis period. Personal and capital expenses are not allowed (s.39 ITA), and entertainment is subject to s.38A ITA.

Source: HASiL — T2025 Tax Responsibilities of Individuals (Business); T2026 Smart Taxpayers e-B (see Official sources section).

Records to keep

• Keep business records for 7 years (s.82 ITA).
• Form CP58 is the statement of commission/incentive income from the payer — keep it for reference.
• e-Invois (s.82C ITA) and TIN and CP500 (instalments) for income other than employment.

Source: HASiL — T2024 Tax Introduction Slides; T2021 Smart Trader — Commission Recipient Edition; T2025 Tax Responsibilities of Individuals (Business) (see Official sources section).

Form CP58 (s.83A)

Form CP58 is issued by the payer of commission/incentives to the recipient. A payer's failure to prepare CP58 is an offence under s.120(1)(b) ITA — a fine of RM200–RM20,000 or imprisonment of up to 6 months, or both.

Source: HASiL — T2021 Smart Trader — Commission Recipient Edition (see Official sources section).

2% withholding tax (s.107D)

Under section 107D of the ITA, a payer that is a company (files C/TN) must deduct 2% from cash/non-cash payments to agents, distributors or stockists if the payment amount exceeds RM100,000 in the previous year. This provision took effect from Year of Assessment 2022.

Important: this 2% deduction is not a final tax — it is an advance payment (EPP) and the recipient reports the full income and claims a credit for the deduction.

Source: HASiL — T2025 e-B Filing Procedure; T2024 Tax Introduction Slides (see Official sources section).

Reporting in the tax return

Business agents report gross income → expenses → adjusted income, then enter the figure in the tax return (BNCP) under the correct category (B for business; BE for employment). CP500 instalments need to be managed for income other than employment.

Source: HASiL — BN Filing Program for Year 2026; T2025 Tax Responsibilities of Individuals (Business) (see Official sources section).

Not covered as at the review date

• The interaction of CP58 vs e-Invois for incentive payments to agents (the e-Invois document type for commission) is not verified at this review — do not detail the document type. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.
• The impact of e-Invois on agent records (issuing e-Invois for agent services) — specific details not verified; refer to e-Invois guidelines. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.
• The full text of s.107D, s.83A, s.33(1) and s.39 has not been re-read from the Act at this review; only the section names are confirmed. This item still awaits official confirmation from HASiL — check again with HASiL before deciding.

Frequently Asked Questions (FAQ)

Q. I am an independent insurance agent — which form should I use?

A. An independent agent's business income is reported in Form B (30 June; e-B 15 July). If you receive commission as an employee, it is reported in Form BE (30 April; e-BE 15 May).

Q. What is agent-principal vs master-servant?

A. Agent-principal indicates self-employment (business — s.4(a)); master-servant indicates employment (s.4(b)/13). Factors: control, risk, equipment.

Q. What is the 2% withholding tax s.107D?

A. A 2% deduction by companies on payments to agents/distributors/stockists exceeding RM100,000 in the previous year. It is not a final tax — you report the full income and claim a credit.

Q. How long must I keep records?

A. 7 years (s.82 ITA), including Form CP58.

Q. What is CP500?

A. An advance payment instrument for individuals receiving income other than employment — minimum RM300, 6 bimonthly instalments starting in March.

Glossary

• s.4(a) ITA — income from a business.
• s.4(b)/s.13 ITA — income from employment.
• s.107D ITA — 2% withholding tax on payments to agents/distributors/stockists.
• CP58 — statement of commission/incentive income from the payer (s.83A).
• CP500 — instalments of advance tax payments.
• EPP — advance deduction (not final).
• BNCP — Income Tax Return Form.