No negative impact from withholding tax exemption

KUALA LUMPUR: The government believes the exemption for withholding tax on overseas firms providing services in Malaysia will not have a negative impact on its revenue in the future, according to Deputy Minister of International Trade and Industry Datuk Chua Tee Yong.

“Basically, a lot of the businesses have given feedback to us that the issues they face have been resolved. And I think the government has already anticipated the revenue in terms of what is expected,” he told reporters after officiating the Malaysian Institute of Accountants’ (MIA) International Accountants Conference 2017 today.

Chua also believes that the Ministry of Finance (MoF) has factored in the economic and financial indicators such as the gross domestic product (GDP) growth outlook and the commodity prices before making the tax relief announcement.

“I believe the government has factored all these and had met with the industry players … where a lot of issues have been sorted out,” he said.

The MoF announced the exemption for withholding tax on overseas firms providing services in Malaysia last month, effectively rolling back the status to pre-January 2017.

Before the relief, companies using overseas expertise would have needed to set aside a 10% portion of the payment for services to be remitted to the Inland Revenue Board.

Meanwhile, during the conference opening ceremony, Chua said at least 1,500 small and medium enterprises (SMEs) are expected to participate in the newly-launched Digital Free Trade Zone (DFTZ) by end of next year.

Last week, Prime Minister Datuk Seri Najib Abdul Razak and Alibaba group founder Jack Ma launched the free trade zone with the participation of 1,972 export-ready SMEs.

Chua said MIA could play an important role by providing value-added services, financial management and relevant business supports to the SMEs to help them improve in terms of products quality, growth and expansion decisions.

The two-day conference, organised by MIA, the developer and regulator of the Malaysian accountancy profession, attracted 3,000 delegates from commerce and industry, public sector, public practice and the academia.