there are payments being made to non-residents, the paying enterprise, whether it is a company or otherwise, should be mindful of the need to deduct withholding taxes.
The answer lies in the fact that if the services are provided in Malaysia over a period of time, and there is business activity in Malaysia, it will trigger a business presence in Malaysia or a permanent establishment under the double taxation treaties. From a payer’s perspective, if you deduct the 10% withholding tax as opposed to the 13% withholding tax, the Inland Revenue Board can disallow the total payment and apply the relevant penalties on the grounds you have misdirected yourself.If the payments are caught within the royalty definition such as payments for use of or right to use copyrights, patents, software, trademarks, designs, models, secret processes, knowhow, etc.
Source: News Formal (newsformal.com)
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