Withholding Tax Form CP37 (Malaysia)

A Withholding Tax Form CP37 in Malaysia sets out the income, deductions, and tax position to be reported to the authority.

The applicable withholding tax rates under the Income Tax Act 1967 vary by income type. Royalties are subject to a 10% withholding tax under Section 109. Interest paid to non-residents attracts 15% withholding tax under Section 109. Special classes of income — including services rendered in Malaysia, installation, maintenance, technical assistance, and management fees paid to a non-resident company — are subject to a 10% withholding tax under Section 109B (with an additional 3% on the service portion for non-resident contractors under Section 107A). Non-resident public entertainers' fees are taxed at 15% under Section 109A. Dividends paid under the pre-single-tier system carry a notional WHT credit under Section 110.

Malaysia's double taxation agreements (DTAs) with more than 75 countries — including the UK, Singapore, Australia, Japan, the United States (limited scope agreement), China, and Germany — may reduce the standard WHT rates stated in the Income Tax Act 1967. For example, the Malaysia–Singapore DTA reduces the royalty withholding rate from 10% to 8%. To claim DTA relief, the non-resident recipient must provide a certificate of residence from their home country's tax authority and submit it to the Malaysian payer before or at the time of payment. LHDN has issued Practice Notes on the procedural requirements for DTA relief claims.

CP37 must be submitted to the LHDN Collection Unit (Cawangan Cukai Hasil Dalam Negeri) with the remittance within 1 month from the date the payment is made or credited to the non-resident, under Section 109(2) of the Income Tax Act 1967. Late submission or failure to withhold attracts a penalty of 10% per month on the outstanding withholding tax under Section 107A(2) or Section 109(3), compounding from the due date.

The payer bears full responsibility for withholding the correct amount and remitting it to LHDN. If the payer fails to withhold and remit, LHDN will assess the payer for the full withholding tax liability as if the gross payment had been made to LHDN — meaning the payer ends up bearing both the commercial payment and the tax. This is a significant compliance risk for Malaysian companies with cross-border service agreements, licensing arrangements, and loan facilities.

Form CP37 in Malaysia is required every time a resident payer makes a payment of a type subject to withholding tax to a non-resident recipient.

CP37 is required when a Malaysian company pays royalties to a foreign licensor — for example, a software licence fee, franchise fee, or patent royalty to a US, Japanese, or European company. The 10% royalty withholding tax under Section 109 of the Income Tax Act 1967 applies unless a DTA reduces the rate, and CP37 must be submitted within 1 month of the payment date.

CP37 is needed when a Malaysian company pays interest on a shareholder loan, inter-company loan, or external financing from a non-resident lender. Interest paid to non-residents is subject to 15% withholding tax under Section 109 of the Income Tax Act 1967. The rate may be reduced under DTAs — for example, to 10% under the Malaysia–UK DTA.

CP37 is required when a Malaysian company engages a foreign contractor or non-resident service provider to perform services in Malaysia — such as installation of equipment, commissioning, technical support, or IT consulting. Section 107A (3% + 10% = split withholding for non-resident contractors) and Section 109B (10% for special classes of income) apply depending on whether the non-resident has a permanent establishment.

CP37 is needed when a Malaysian entity pays management fees, technical service fees, or advisory fees to a foreign parent company or related party. LHDN's Transfer Pricing Guidelines require that such fees be at arm's length, and the WHT obligation under Section 109B at 10% applies regardless of whether the services were rendered in or outside Malaysia.

CP37 is required when a Malaysian entertainment promoter or organiser pays performance fees to a non-resident public entertainer — musician, athlete, or performer — appearing in Malaysia. Section 109A imposes a 15% withholding tax on such payments.

A complete CP37 Withholding Tax remittance for Malaysia must contain the following essential elements.

Payer Identification: The full legal name of the Malaysian payer, SSM registration number, and LHDN income tax reference number must be stated. The payer's tax reference is used by LHDN to match withholding tax remittances against the payer's annual Form C or Form B return.

Non-Resident Payee Details: The full legal name, country of residence, and nature of entity (company, individual, or partnership) of the non-resident payee must be stated. If a DTA rate is being applied, the payee's home country tax reference number and the DTA citation (e.g., Malaysia–Germany DTA, Article 12) must be stated.

Payment Details and Type of Income: The date of payment, the gross amount paid in Ringgit Malaysia (RM), the type of income (royalty, interest, technical service fee, contract payment), and the applicable withholding tax rate must be specified. Where the payment is in a foreign currency, the RM equivalent at Bank Negara Malaysia's mid-rate on the payment date must be used.

Withholding Tax Computation: The gross payment, the applicable WHT rate (standard or DTA-reduced), and the net WHT amount to be remitted must be calculated. If DTA relief is claimed, the basis for the reduced rate and the payee's residence certificate reference must be stated.

DTA Certificate Details: Where the payer is applying a DTA-reduced rate, the date and reference number of the non-resident's certificate of residence issued by the foreign tax authority, and the DTA article relied upon, must be attached to the CP37 submission.

Remittance Amount and Due Date: The total WHT amount remitted and the payment method (ByrHASiL, FPX, or bank counter) must be stated. The remittance is due within 1 month of the date of payment to the non-resident under Section 109(2) of the Income Tax Act 1967. Late payment attracts a 10% penalty per month under Section 109(3).

Authorised Signatory: The director, principal officer, or tax agent signing the CP37 confirms that the withholding calculation is correct and that the remittance has been or will be made to LHDN's Collection Unit by the due date.

Additional compliance elements for a Withholding Tax Form CP37 (Malaysia) used in Malaysia include: Under Malaysian law, the Contracts Act 1950 (Act 136) governs contractual obligations. The Companies Act 2016 (Act 777) regulates corporate entities through the Companies Commission of Malaysia (SSM). The Employment Act 1955 (Act 265) and the Department of Labour govern employment matters. The Personal Data Protection Act 2010 (Act 709) and the Personal Data Protection Department protect personal data. The Inland Revenue Board of Malaysia (LHDN) administers tax obligations. The Industrial Court adjudicates employment disputes under the Industrial Relations Act 1967 (Act 177). Forms-legal.com provides this template as a starting point for Malaysia-compliant documentation.