Explain the withholding tax obligation of Ataslink Bhd

Assignment Help Accounting Basics

Reference no: EM132659293

Questions -

Q1. Angel Chan Sdn Bhd, a company resident in Malaysia, manufactures tools and dies for export. In 2015, the company entered into an agreement with Chen Wei (Taiwan) Ltd for technical assistance and supply cum installation of plant and machinery. The following expenses have been incurred:

i) Technical advice / management RM70,000

ii) Supply of plant and machinery RM230,000

iii) Services in connection with installation of the plant RM45,000

Required:

a) State with reasons whether each of the above amounts is subject to withholding tax. Where applicable, state the rate of withholding tax.

b) Explain the consequences of not complying with the withholding tax provisions.

Q2. Dreamworld Sdn Bhd is presently developing a theme park in Negeri Sembilan. During the year ended 30 September 2016 the company made the following payments:

1. RM350,000 to Mr Red Baron, a citizen-resident of Germany being interest on the RM10,000,000 loan at the interest rate of 3.5% per annum.

2. RM60,000 being royalties paid to Solid Rock Sdn Bhd. (resident and based in Perak) for use of patents relating to foundation work.

3. RM2,600,000 to KimChi incorporated (resident in Korea) for work carried out for the theme park. The breakdown is as follows:

Nature of payment RM

Cost of plant and machinery 700,000

Technical advice on the installation of plant and machinery rendered in Malaysia 500,000

Contract work on infrastructure and buildings carried out in Malaysia 1,400,000

2,600,000

Required: Critically discuss whether each of the above payments is subject to withholding tax. State the rate of withholding tax and the due date of payment, wherever applicable.

Q3: (a) Ataslink Bhd signed an agreement with Joneslee Ltd, a Korean company, for the construction of a building in Kuala Lumpur. Joneslee set up a project management office in Kuala Lumpur. The total value of the contract is RM7 million of which RM3 million is the service portion and RM4 million is the cost of materials.

Required: (a) Explain the withholding tax obligation of Ataslink Bhd under Section 107A of the ITA 1967 with regards to these payments and determine the amount to be withheld.

(b) For the purposes of the construction project, Joneslee paid RM200,000 to another Korean company for the hire of equipment.

Required: State whether or not this payment has Malaysian tax implications and if so, what they are.

Reference no: EM132659293

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