Tax Policy Update: 2% Deduction for Deceased Agents, Dealers, and Distributors to Be Removed Starting August 1, Says IRB

PUTRAJAYA, June 30 — The Inland Revenue Board (LHDN) announced that, effective August 1, the two per cent tax deduction for deceased agents, dealers, or distributors (Resident Individuals), also known as EPPs, will no longer be accepted.

In a statement today, LHDN explained that under Section 2 of the Income Tax Act (ITA) 1967, the term “individual” is defined as a living or “natural” person.

“As such, once an EPP has passed away, they no longer qualify as an ‘individual’ under this provision,” the statement said.

Any income received after the EPP’s death must be managed by an executor, administrator, heir, or legal representative, and must be declared under a Deceased Person’s Estate (TP) tax file.

To facilitate this, LHDN said the TP file must be registered at any LHDN office by submitting the Notification of Taxpayer’s Demise (Form CP57), along with supporting documents such as the death certificate and grant of probate or letter of administration.

LHDN urged paying companies and the deceased’s estate representatives or heirs to take note of this new ruling and comply with tax regulations when managing posthumous income.

For ease of access, Form CP57 is available for download from LHDN’s official portal via: https://phl.hasil.gov.my/pdf/pdfborang

Under Section 107D of the ITA 1967, companies are currently required to deduct two per cent tax from payments made in cash to resident individuals appointed as EPPs, who earn income through sales, transactions, or schemes conducted in that role. — Bernama