Attention! Agents, dealers and distributors whose annual commission exceeds RM100,000 are required to pay withholding tax from this year onwards!
According to the information issued by the Inland Revenue Department (LHDN), agents, dealers and distributors whose annual commission exceeds RM100,000 will be subject to withholding tax of 2% under section 107D of the Income Tax Act 1967.
Industries with annual commissions exceeding RM100,000 include insurance, real estate, electrical, automotive and direct marketing. The odd job economy such as Grab drivers, FoodPanda delivery workers or those with lower commissions are not affected.
In order to give agents, dealers and distributors more time to deal with withholding tax, those concerned are allowed to pay withholding tax for January to March only on April 1.
Commissions are eligible for withholding tax regardless of whether they are paid in the form of money or goods. For those who pay out commissions in the form of goods, they are assessed on the market value and are subject to withholding tax once the value of the commission exceeds RM100,000.
This government measure is intended to reduce the incidence of tax evasion and omission, and the withholding tax works on the same principle as the monthly payroll withholding tax (PCB).
