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    Dta Wtax Qna Micpa

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    Hafiz Musannef

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    Dta Wtax Qna Micpa

    Uploaded by

    Hafiz Musannef
    36 views3 pages

    Copyright

    © © All Rights Reserved

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    DOCX, PDF, TXT or read online from Scribd

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    Copyright:

    © All Rights Reserved
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    Download as docx, pdf, or txt
    36 views3 pages

    Dta Wtax Qna Micpa

    Uploaded by

    Hafiz Musannef

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    DTA / WTAX QNA

    Qn 1
    State the consequences for the non-compliance of withholding tax obligations if Goal Sdn Bhd, a resident,
    makes a payment to XYZ Co Inc, a non-resident of USA, for design services performed for 2 weeks in
    Malaysia.

    ANS 2

    Since the services are falling under Section 4A of ITA and is deemed derived under Section 15A, Goal Sdn Bhd
    is required to withhold and remit the withholding tax as per Section109B to the Malaysian Inland
    Revenue Board (MIRB) within one month from the date of payment made / crediting the net payment to
    XYZ Co. Ltd.

    The following are the consequences for non-compliance with the WT provision:
    (i) A late payment penalty of 10% will be imposed based on the amount of unpaid WT.
    (ii) Payments to non-residents that attract WT would not be deductible in arriving at the adjusted
    business income of the payer if WT has not been paid to the MIRB. However, the payments made
    would be deductible if the payer makes good the payment of the WT and the late payment penalty
    that should have been paid to the MIRB.
    (iii) The payer is liable to pay the WT plus the penalty above as a debt due to the MIRB.
    (iv) A penalty for incorrect returns under Section 113(2) of the Act will be imposed if a tax deduction
    on the expense that is subject to WT is claimed and the WT and penalty are not paid by the due
    date of submission of the tax return.

    QN 2
    ABC Sdn Bhd is seeking technical consultancy support services from Watermark International Pte Ltd, an
    Australian tax resident company. Watermark will send its employees to Malaysia to perform part of the
    consultancy services for a period of five months. The following payments will be made by ABC Sdn
    Bhd to Watermark.

    Types of expenses RM’000


    Supply of parts 315
    Consultancy services in Malaysia 400
    Training in Malaysia 75

    Required:
    i. Explain whether Watermark International Pte Ltd has permanent establishment in Malaysia. (4
    marks)

    ii. Explain whether the three payments made are subject to withholding tax, and if so, state the
    withholding tax rate (Ignore the effect of Double taxation agreement on the withholding tax rate).

    ANSWER 2
    i. The consultancy activities will be conducted in Malaysia and are more than 3 months and thus,
    according to Article 5 paragraph 4(c) of the DTA, Watermark Pte Ltd has a permanent
    establishment in Malaysia.
    ii. The following tax treatment are:

    a. The supply of parts of RM315,000 are not subjected to withholding tax because it is not a
    service portion of the contract. Only the service portion of the contract is charged withholding tax.
    b. The consultancy fees RM400,000 is subjected to a withholding tax of 10% under s107A of the ITA
    1967 and an additional 3% of the service portion in respect of tax of employees of Watermark.
    c. The training fees RM75,000 is subjected to a withholding tax of 10% under s107A of the ITA 1967
    and an additional 3% of the service portion in respect of tax of employees of Watermark.

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