Malaysia Tax Agency Posts Case Report on SCIT Decision Clarifying Withholding Tax for Software Payments

The Malaysian Inland Revenue Board June 3 posted online, in English, a case report on Special Commissioners of Income Tax (SCIT) Decision No. MOF.PKCP.700-7/1/2526, clarifying withholding on software payments. The taxpayer, a non-exclusive distributor under a distribution agreement with a Singaporean entity, paid the entity for use of software. The Inland Revenue Board assessed withholding tax on the payments. The taxpayer argued in part that the payments weren’t royalties under the 2004 Malaysia-Singapore DTA. On review, the SCIT found that: 1) characterizing software payments as royalties under Income Tax Law 1967 is consistent with the United Nations Model Double Taxation ...