Google Ads & LHDN: What Malaysian SMEs Need to Know About Withholding Tax (WHT)
If you’re a Malaysian SME owner running Google Ads, you’re already making smart moves in digital marketing. However, there’s one administrative detail that often catches new businesses by surprise: Withholding Tax (WHT).
While you’re paying the 8% Sales & Service Tax (SST) on your Google invoices, WHT is a separate, critical compliance step that the Inland Revenue Board of Malaysia (LHDN) requires you, the business owner, to handle. Getting this wrong can lead to serious penalties.
Here’s a clear breakdown to help you report your tax accurately and stay compliant.
1. What Exactly is Withholding Tax (WHT)?
Simply put, WHT is a tax mechanism applied to payments made by a Malaysian resident (your company) to a non-resident individual or company (like Google or Meta) for specific types of services rendered in or provided to Malaysia.
In layman’s term, non-resident companies such as Google doesn’t pay income taxes directly to the Malaysian government. Hence, you will have to pay on their behalf.
The reason the government collects WHT is to ensure that non-resident companies generating income from Malaysian sources are taxed fairly, even if they don’t have a permanent physical presence (Permanent Establishment or PE) in the country. It acts as an efficient collection mechanism at the source of the payment.
Instead of the non-resident company paying the tax directly to LHDN, you are legally required to “withhold” a portion of the payment and remit that withheld amount to LHDN on their behalf.
Key Definition:
- Payer (You): The Malaysian company paying for the service.
- Payee (Google/Meta): The non-resident entity receiving the payment.
- WHT Rate: A percentage (often reduced by a Double Taxation Agreement, DTA) of the gross payment that must be submitted to LHDN.
2. WHT vs. Sales & Service Tax (SST): Don’t Get Confused
This is the most crucial distinction for new SMEs.
| Feature | Withholding Tax (WHT) | Sales & Service Tax (SST) |
|---|---|---|
| Collector/ Remitter | The Malaysian Company (You) collects the tax and remits it to LHDN. | The Non-Resident Company (Google/Meta) collects the tax from you and remits it. |
| Rate | It depends | 8% (current rate, reflected on your invoice) |
| Appears on Invoice? | No. This amount is not listed by Google; you must calculate and deduct it. | Yes. You pay this amount directly to Google. |
You must still pay the 8% SST on your Google Ads invoice, but you also have a separate WHT obligation.
3. What is the WHT Rate for Google Ads?
Payments to Google (billed by Google Asia Pacific in Singapore, as of 2025) are for services and are therefore subject to WHT under Section 109B of the Income Tax Act 1967. The standard rate is 10%, but here’s why you can use the lower rate:
- Double Taxation Agreement (DTA): Malaysia has DTAs with both Singapore, where Google’s billing entities are typically located. These treaties override local tax law to prevent a company from being taxed twice on the same income.
- Reduced Rate: Under the relevant DTA, the WHT rate for payments classified as “royalties” is generally reduced from 10% to 8%. Refer to the DTA WHT rate here.
Therefore, the amount you must withhold from your payment to Google and remit to LHDN is 8% of the gross service fee.
4. How to Pay Withholding Tax (WHT) Step-by-Step Guide
Follow these steps every time you need to make a WHT submission for your Google Ads payment. Remember, the 8% WHT is based on the gross amount of the service fee (pre-SST).
Step 1: Login to MyTax
- Go to https://mytax.hasil.gov.my/ and log in with your credentials.
Step 2: Note Your TIN and Navigate to e-WHT
- Take note of your company’s Tax Identification Number (TIN) displayed on the top left of the screen (on desktop view).
- Go to the ezHasil Services dropdown menu and select e-WHT.
- On the left sidebar, select CP37 (the form for payments to non-residents).
Step 3: Complete Payer and Payee Details
The system requires two sets of information. The payer is you, the Malaysian company, and the payee is your overseas vendor, Google.
- Payer (Your Company): Paste your company’s TIN number, and your information will auto-populate.
- Payee (Google/Vendor): For the person whom the royalty has been paid, select your overseas vendor, Google. Google’s Malaysian TIN is 24921924070.
Step 4: Calculate and Input the 8% WHT
This step confirms the tax rate and the amount due.
- Choose Other Royalty Rate and key in 8% (the rate for 2025) as per the DTA.
- Key in the date range for the service and the payment date.
- Key in the Gross amount (this is the amount without SST). The system will auto-generate the WHT that you need to pay.
Step 5: Submit and Make Payment
- Once all details are filled and confirmed, submit the form.
- Proceed to make the payment online. The system generates a payment slip for online banking.
Step 6: Ensure Timely Submission
- The payment must be completed and submitted to LHDN within 30 days after you paid for the service. Note that currently, you can only pay online if the fee is RM1 or more; for smaller amounts, you may need to pay at a counter.
Extra Tip: What About Meta Ads (Facebook/Instagram)?
The compliance obligation is the same. Meta’s advertising services are billed through their entity in Ireland (as of 2025). Since Malaysia has a DTA with Ireland, the WHT rate is also reduced.
- Meta Ads WHT Rate: 8%
- Meta TIN: 23548671100
Critical Warning for Meta Ads WHT Submissions
Meta often bills on low limits (starting at just RM50) before gradually increasing the threshold. This means you will receive several invoices requiring WHT submissions within a short period.
Exercise Extreme Caution: The MyTax system does not allow you to amend or delete WHT submissions once they are processed. Therefore, you must be meticulous to avoid duplicate submissions. Ensure you have paid the WHT for Invoice A before moving on to Invoice B. The frequency of these low-value invoices makes careful tracking of your payment dates and submissions essential to maintain compliance within the 30-day limit for each small payment.
Additionally, when a campaign reaches its set end date, a final invoice is generated for any remaining balance, which may only be for a few Ringgit. This means the WHT amounts can easily fall below RM1.00, and had to be paid manually at an LHDN counter or branch.
Final Words
By following the guidelines in this post, you ensure full compliance with LHDN regulations while leveraging the power of Google and Meta advertising. We hope you find this post useful.
