Kuala lumpur: The Inland Revenue Board (LHDN) has announced that starting August 1, the two percent tax deduction for deceased agents, dealers, or distributors under the Electronic Payment Platform (EPP) will no longer be applicable. This decision aligns with the definition of 'individual' as described in Section 2 of the Income Tax Act (ACP) 1967, which refers to a living or 'natural person'.

According to BERNAMA News Agency, LHDN clarified that once an EPP has passed away, they are no longer recognized as an individual for tax purposes. Any income received posthumously must be managed by an executor, administrator, heir, or legal representative and reported under the Deceased Person's Estate (TP) file.

The LHDN emphasized that the responsible party must register the TP file at any LHDN office, requiring the completion of a Notification of Taxpayer's Demise (CP57) form, along with necessary documents such as the death certificate and the grant of probate or letter of administration.

Additionally, LHDN urged both the paying company and the heirs' representatives or estate administrators to adhere to this new ruling and ensure compliance with the current tax laws and procedures.

According to LHDN, Section 107D of the ACP 1967 mandates companies to make a two percent tax deduction on cash payments to a deceased EPP. This deduction previously applied to resident individuals appointed by companies as EPPs, who received payments from sales proceeds, transactions, or schemes conducted in that capacity.