Effective 1st of January 2020, all registered foreign service providers (FSPs) who provide any digital services to a consumer in Malaysia would be required to charge a service tax on the digital services.
This change isn’t limited only to e-commerce players but also traditional businesses where many have started to embrace technology for their business, for instance, social media marketing, cloudbased accounting software etc.
What is Withholding Tax (WHT) in Malaysia?
The withholding tax in Malaysia is an amount withheld by the party making payment (payer) on
income earned by a non-resident (payee). This amount has to be paid to LHDN.
In simpler terms, if you are paying non-local (foreign) vendors, you need to withhold a certain % of
the invoiced amount and pay to LHDN as a form of tax, and the remaining balance to be paid to
your foreign vendor
Learn more about the imposed What is the Withholding Tax on Foreign Service Providers in Malaysia at this WeCorproate blog.
