08/06/2026

BIZ & FINANCE MONDAY | JUNE 8, 2026

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Withholding tax compliance and IRB enforcement

GTA to strengthen position as aerospace service provider changing rapidly due to geopolitical tensions and trade uncertainties, Nonee Ashirin said that in a more

W ITHHOLDING taxes on interest and royalties have existed in Malaysia since the enactment of the Income Tax Act 1967. Significant changes to the withholding tax regime took place in 1983 when withholding tax was extended to contract payments made to non resident contractors. Later that year, the scope was expanded to cover special classes of income such as technical fees, services and rental of movable property. To add to the menu of withholding taxes, Section 4(f) and its related derivation provision were introduced in January 2009. Taxpayers’ dilemma Taxpayers have long faced a dilemma in determining whether a payment made to a non-resident is subject to withholding tax and, if so, which category of withholding tax applies. The confusion arises because the boundaries between the various withholding tax provisions are often blurred. A common example is distinguishing between service fees, royalties and contractor payments, or determining whether a payment should fall under contractor withholding tax or special classes of income. To add more confusion to the “melting pot”, the wording of the legislation has led to differing interpretations. This is evident from the evolution of the special classes of income

complex global environment, reliability, transparency, and resilience are becoming in creasingly important. “For MRO players such as GTA, maintaining global certification

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of this nature do not help the taxpayer to arrive at a decision as these matters are continuously being litigated in the courts. What is IRB doing now? It is a current practice for IRB to issue letters to Malaysian businesses paying non-residents to ask for information and documents to assess whether you are complying with the withholding tax provisions. The information commonly requested are the creditors ledger, contracts/agreements, invoices, payment slips, etc. The intention here is to collect the withholding taxes and penalties from the non compliant taxpayers. Our recommendation The government recently encouraged voluntary compliance through programmes such as the stamp duty and sales and service tax voluntary disclosure initiatives. In the same vein, serious consideration should be given to introducing a withholding tax voluntary disclosure programme. Such a programme would save administrative resources and provide taxpayers who do not wish to dispute the IRB’s position with an opportunity to regularise their withholding tax affairs. This article is contributed by Thannees Tax Consulting Services Sdn Bhd managing director SM Thanneermalai (www.thannees.com). Malakoff Group CEO Syahrunizam Samsudin said, “Reliable power plants are the result of disciplined maintenance, skilled people and continuous improvement. As Malaysia’s largest independent power producer, Malakoff has always taken the long view on asset management and technical excellence – not just for immediate gains. This MoU with TNB Remaco is a natural extension of that commitment. “Both organisations bring decades of operational experience in the Malaysian power sector and by formalising this collaboration, we are creating a platform to share knowledge, build capability and raise the bar on how power plants are maintained and operated in this country.”

provisions. Initially, services were subject to withholding tax only if provided in connection with the management and administration of a scientific, industrial or commercial undertaking, venture, project or scheme. Over time, this provision

standards, audit readiness, and operational consistency is critical to building long-term trust with OEMs and defence clients. Malaysia can strengthen its position by continuing to develop well-integrated aerospace ecosystems with strong operational standards across key hubs such as Subang, Penang, and Johor,” she added. Nonee Ashirin said that enhancing digital isation, traceability and process transparency within MRO operations will also help build greater confidence among OEMs and global partners, particularly in terms of quality assurance and audit readiness. “At the policy level, maintaining clarity, consistency, and alignment with international aerospace and trade standards will remain important in supporting long-term partner ships. Malaysia also has the opportunity to play a constructive role within the broader Asean aerospace ecosystem, contributing to a more diversified and resilient regional supply chain network,” she said. Looking ahead to 2030, Nonee Ashirin said GTA is looking to strengthen its position as a trusted and established aerospace service provider, with strong long-term partnerships with OEMs, customers, and regional stake-holders. This includes continued growth in technical capabilities, operational excellence, and increased adoption of digital and data-driven maintenance solutions that support evolving industry needs. “For Malaysia, we are looking at achieving a more developed and diversified aerospace ecosystem, with stronger participation in higher-value activities such as engine MRO, engineering services, and aerospace systems support. “It would also include a growing base of local companies capable of participating more meaningfully in regional and global supply chains. “Overall, the long-term aspiration is for Malaysia to be recognised as a reliable, competitive, and well-integrated aerospace hub within Asean, contributing sustainably to the global aerospace industry by 2030,” Nonee Ashirin said.

has been interpreted more broadly to cover a wider range of services. The interpretation has also continued to evolve through Inland Revenue Board (IRB) pronouncements and court decisions. Another recurring area of dispute

between IRB and taxpayers is the interaction between domestic legislation and double tax agreements (DTA). The domestic provisions do not always align with DTA provisions, which are generally modelled on the United Nations or Organisation for Economic Cooperation and Development model treaties A notable example is the definition of “royalty”. Malaysian domestic law specifically includes “the use of or the right to use software”, whereas DTA generally refer to “the use of or the right to use any copyright”. In many software licensing arrangements, the user does not acquire any copyright rights. Nevertheless, IRB often takes the view that payments for access to digital platforms or software are subject to withholding tax because software is being used. Unfortunately, it is not a simple matter of whether it is correct or incorrect and disputes

Malakoff, TNB Remaco to explore power plant MRO collaboration PETALING JAYA: Malakoff Technical Solutions Sdn Bhd (MTSSB), a wholly owned subsidiary of Malakoff Corporation Bhd, has exchanged a memorandum of understanding (MoU) with TNB Repair and Maintenance Sdn Bhd (TNB Remaco), a subsidiary of TNB Power Generation Sdn Bhd, the generation arm of Tenaga Nasional Bhd (TNB), to explore collaboration in maintenance, repair and overhaul (MRO) services for power plants, as well as training and competency development opportunities. The collaboration will also focus on identifying potential third-party MRO business opportunities, enabling both organisations to leverage their combined expertise and networks beyond their existing operations. The MoU exchange was held during the Energy Transition Conference 2026 at the Kuala Lumpur Convention Centre by Malakoff senior vice-president of the thermal division, Mohd Kopli Yunus, and TNB Remaco managing director Abidin Sarjo. The companies will cooperate in identifying MRO opportunities across power plant fleets and explore training and competency development programmes within their technical environments. They will also endeavour to identify and pursue opportunities to extend their collective MRO capabilities and technical expertise to third-party power plant operators, further broadening the commercial scope of the collaboration.

Zeekr Malaysia partners DC Handal to strengthen EV charging network PETALING JAYA: Zeekr Intelligent Technology Malaysia Sdn Bhd (Zeekr Malaysia) has signed a memorandum of understanding (MoU) with Handal Green Mobility Sdn Bhd (DC Handal) to collaborate on offering Zeekr Power electric vehicle (EV) charging facilities nationwide. stations (minimum two charging points, with minimum 120kW output) that support Malaysia’s North–South Expressway, with plans for expansion in subsequent phases.

committed to delivering a holistic ownership experience that goes beyond the vehicle. This collaboration with DC Handal allows us to enhance our Zeekr Power ecosystem by expanding access to high-quality charging infrastructure at key locations. It is an important step towards ensuring our customers enjoy a seamless and premium electric mobility experience, whether in the city or on long-distance journeys.” Established as a sub-brand of Zeekr Group’s energy business, Zeekr Power revolutionised the ultra-fast charging ecosystem in the 800V era. It currently operates the largest automaker-led ultra fast charging network in China with 860 ultra-fast charging stations, 4,134 chargers as well as 1,536 fast-charging stations covering 183 cities. DC Handal currently operates 250 charging points across Peninsular and East Malaysia.

DC Handal has been identified as a key partner due to its rapid network expansion and strong footprint in strategically located charging corridors, making it well-positioned to support Zeekr’s infrastructure ambitions in Malaysia. “This collaboration with Zeekr Malaysia allows us to play a central role in supporting Malaysia’s sustainable mobility sector by expanding its high speed EV charging infrastructure and providing our customers with a speedy and seamless charging experience,” said DC Handal chief technical officer Esa Fawsal Salleh. Zeekr Malaysia general manager Eddy Lu said, “At Zeekr, we are

Through the collaboration, Zeekr Malaysia aims to provide dedicated charging privileges for more than 4,000 Zeekr owners in the country by leveraging DC Handal’s expanding network of superfast direct current charging stations across strategic locations nationwide. The chargers can dispense up to 400kW of power with the potential of supporting up to 640kW for selected chargers in the future, given its 1.2MW capacity. The initial phase of the collaboration will focus on providing seven charging

From left: Lu, Zeekr Malaysia product head Loh Yan Teng, Esa Fawsal and Lim Kok Keong of DC Handal.