The Income Tax Act, 196/ provides that where a person (referred herein as payer ) is liable to make payment as listed below (other than income of non-resident public entertainers) to a non-resident person ( NR payee), he shall deduct withholding tax at the prescribed rate from such payment and (whether such tax has been deducted or not) pay that tax to the Director General of Inland Revenue within one month after such payment has been paid or credited to the NR payee.

Source: Inland Revenue Board Required:

 (a) Explain TWO (2) responsibilities of the payer in the withholding tax.

(b) Discuss SIX (6) types of withholding tax scope with example according to Income Tax Act 1967

i. Special classes of income (S4A)

ii. Interest (s 15)

iii. Royalty ($ 15) 

iv. Contract payment (s 107)

v. Public entertainer ($ 109A)

 

The following tax rates are to be used in answering the questions (a) 4 *The first RM500,000 "In excess of RM500,000 < (b) Rate of Capital Allowances E tt t Chargeable income ( t@tttt Initial allowance Annual allowance Motor Vehicles 20% 20% Disposal General Plant & Machinery 20% (c) Real Property Gain Tax Rate < Within 3 years In the 4th year In the 5th year In the 6th and subsequent years 14% Heavy Plant & Machinery 20% Companies 30% 20% 15% 5% 20% Tax rate 17% 24% Computers Others Individuals (citizen or permanent resident) 30% 20% 15% 0% < 20% 80% 20% 30% 30% 30% 5% 10% Non-citizen Building 10% 3%