When do I pay withholding tax to LHDN and what is the penalty for paying late?

LHDN's withholding tax page and the Act are clear on timing: the payer must pay the tax to LHDN within one month after paying or crediting the payee. The duty applies whether or not the tax was actually deducted.

Practical steps

1. Identify the payment type and the section (107A, 109, 109B).
2. Check for a treaty rate and keep the supporting documents.
3. Deduct, then remit through MyTax with the right form (CP37 for interest and royalties, CP37A for contract payments, CP37D for special classes of income; CP37S and CP37DS exist for small-value payments).
4. Keep a copy of the form and the payment proof.

Late or non-payment. The amount you fail to pay is increased by 10%, and the total is a debt due to the Government payable forthwith. The rule sits in the section for the payment type: s.107A(2) for contract payments, s.109(2) for interest and royalties, and s.109B(2) for special classes of income. The Director General may remit the increase for good cause.

Deduction at risk. Under s.39(1)(f), (i) and (j), the expense is not deductible if the tax was not deducted and paid, unless you have paid the 10% increase. If the tax or increase is paid after the due date of the return in which the deduction was claimed, the s.113(2) penalty for an incorrect return can still apply.

Credited counts as paid: accruing an amount to an overseas party's account counts as crediting, so the one-month clock can start before cash leaves.

Because the deadline is short, set up a checklist for every overseas payment.