EXERCISES ON WITHHOLDING TAX

1. In March 2021, Lotus Ltd a company based in German issued a letter of guarantee to a bank resident in German to undertake to settle a loan taken by Guest Ltd, a non-resident company having a place of business in Malaysia. For this arrangement, Guest Ltd paid Lotus Ltd a guarantee fees equivalent to 1.5% of the loan amount. This guarantee fees is charged as an expenses in the profit and loss account of Guest Ltd in Malaysia.

Explain whether the above transaction should subject to withholding tax in Malaysia?

2. West Tiger Sdn. Bhd. a resident company in Malaysia specializing in Water management services. On 1 June 2021, the company has signed an agreement with Briliant Ltd, a Swiss company to undertake a study of water market stability in Malaysia and Swiss. The fee for the project is RM75,000, taking a total of 60 days where 15 days are spent in Malaysia. The report was completed overseas. The 15 days accommodation in Swiss Hotel, Kuala Lumpur of RM22,500 was paid directly by West tiger to the hotel on 24 September 2021. It is also agreed that West Tiger will bear the withholding tax arises and the amount of RM75,000 is paid to Briliant on 10 October 2021.The applicable rate of withholding tax is 10%)

Required:

Explain whether the amount above are liable to withholding tax and if yes, how much and when is the due date to pay the tax to IRB