Bintara Sdn. Bhd., a company resident in Malaysia, manufactures microchip. Recently, Prestige Pte. Ltd., a foreign company, discovered a new way of processing data at a faster speed. Bintara Sdn. Bhd. approaches Prestige Pte. Ltd. for the transfer of technical know-how. Prestige Pte Ltd agreed to this and demand a payment of RM500,000. This amount is payable on 15 June 2019 and to be paid as follows:

I. RM200,000 to be paid to Prestige Pte Ltd branch in Malaysia

II. RM300,000 to be remitted to Prestige Pte Ltd in foreign country

To transfer the technology, Bintara Sdn. Bhd. needs to purchase a new machine and borrows RM1 million from a foreign bank in France to acquire the new machine. The interest for the sum borrowed amounted to RM120,000 and its payable on 30 September 2019.

Required: 

State with reason whether the above payments made by Bintara Sdn. Bhd. are subject to withholding tax. State the rate(s) imposed and the amount of withholding tax (if applicable), and the due date payable to Inland Revenue Board.

Answer rating: 100% (QA)

Let us first understand what Withholding Tax means If a business based in Malaysia procures services from a Non Resident business not residng in Malay... View the full answer