Hello everyone!

I am seeking some guidance regarding a tax-related issue that one of my friends, based in Sabah, is currently facing. She is partnering with an individual in the US to sell digital software and services. In this partnership, she provides a PayPal account and handles tasks such as monitoring income, issuing refunds, managing disputes, and overseeing accounting activities. Most of the software and services, however, are managed by her US-based partner.

Recently, she discovered that she needs to pay taxes, which has come as a surprise to her, as she has never had any experience with tax obligations or understood them in detail.

To provide more context, the business income is withdrawn to her bank account, from which she receives 10% of the total income, while the remainder is sent to her partner via international wire transfer. The business generates an income ranging between $2,000 and $9,000 USD per month, with fluctuations.

She is concerned and unsure about how to proceed with the tax payment process. Specifically, she is wondering if she is required to pay tax on the full income or just the 10% she receives.

Could anyone clarify how tax payments work in this situation, and what steps she should take to ensure compliance?

Thank you for your help and advice.

No invoices to prove the cost of business, then those money are 100% profits. Your friend only took 10% which isn't even to cover income tax. I wonder if it could be flagged as money laundering?

unless got proper documentation proving that her income is the 10%, she will be taxed on full amount she received.

as the other mentioned, thread carefully in this case, can easily fall into the money laundering category

(dont think transfer slip is acceptable)

If it is money laundering the bank could have flagged it already but the business is roughly around 1 year + already. As for the documentation I will ask her again if there's any proper documentation including transaction of every sells made and if there any proper agreement.

On paper will look like clear cut case of money laundering.

How sure your friend to confirm it is generated from legit software sales?

I afraid it is not and might be something else which your friend's paypal would be charged back for dispute after few months.

I suspected this too.

She mentioned that it has been over a year, and she recently showed me the full transaction history from PayPal. Over the past year, there have only been two refund cases. As for disputes none.

best to get a professional accountant to consult / do it for her

Everytime PayPal withdraws money into your bank account, just need around RM10K, the bank will ask for transaction/invoice prove alerady. I always kena with the harimau bank. And they will need to provide this to bank negara. Susah mahu lari bang nowadays. Eventually they will notice especially if it is consistent.

I suspected something. Please tell your friend try to check something to show the software sales is really exist.

Receiving income without been taxed, asking for trouble ni.

How this friend enter into partnership with US person?

lel ur fren is used as scam mule

Confirm money laundering. I’m pretty sure TS’s friend didn’t even verify the transactions are legit or not and just happily pocketing the 10% every month.

jap tak faham. withdrawal $2000 to $9000 USD to ke akaun siapa ?
why dont take 10% as agreement ?

She is just basically a mule account for money laundering...

Your friend really blinded by greed...such activities should trigger a red flag already. Why would a business needs a third party that serves no purpose to transfer their money to? Monitoring income, overseeing acount activities is a joke..she basically serves no purpose in this.
All points to money laundering.

Slips or history of money transactions only doesn't mean this business is legit btw. Engage a professional but i think all is lost most likely.

here are few questions to think about,

is the "software services" sold here? is there a local business registered?

if its solely using an account of money transfer, then i have bad news for you its just a mule account. and this is a big issue.

ive had a family member entangled into something like this before. Person A (foreigner) promised my relative (person B) 10% commision for using her account for carpet business payment.

it went okay for about 8 months untill shit hit the ceiling. There was a lovescam that happened in australia and the money bounced into few accounts and finally into B's account. There was a whole police operation that went down and B was arrested.

it is all settled now, but for the sake of your friend, time to pull the plug on this operation. LHDN is only a small problem, but if the account gets money in and out from god knows where, it may be used for a scam. Account holders will be liable, ignorance defence will not work in the eyes of the law.

This post has been edited by scoupe: Jun 20 2025, 09:31 AM

It is the total amount of all source of income that bring into malaysia and money in malaysia , including her 10%


Also there is huge possibility of money mule and money laundering , it is the matter of time bank will investigate

never heard of AMLA?

Most probably your friend's account already been flagged by BNM under STR..just waiting for the right time to go in.

she got taxed in US already?

any paperwork to support it? what is the money transfered in are for?

Looks like money laundering and like other said ur friend is being used as mule account.

As for why now only kena flag, ever heard of the Chinese saying : let the string go far to fish the big one?

Better come clean with IRB..once AMLA masuk..gone case already

I also smell a huge AMLA case here.
1. Why do they use your friend's account and not a formal company account? Just because it's online marketplace give them no right to use personal account.
2. What is your friends role in this whole business? Does your friend even know who the other person is? Receiving 10% based on sales as employee? What a nice life. Business partner? Then time to show all documents.
3. Sabah. A foreigner needs to find someone from Sabah to do accounting using personal account.

I'd be more worried about AMLA than paying tax at this point.

Your friend should be VERY WORRIED about this. Good luck.

Apologies for the delayed response. She has already contacted a tax consultant. To summarize, all income generated through her Stripe and bank accounts is subject to Malaysia's tax regulations.

She is required to provide all proof of delivery, documents, e-invoices from Stripe, and any other related documentation, ensuring that everything is backed up in case of any inquiries.

In short, all income is taxable by LHDN (Inland Revenue Board of Malaysia).

Regarding your question, she mentioned that she is already familiar with the software/services, as she uses them herself. Her role, on the other hand, is to manage the website, including providing live support (24/7 or as available), as well as tracking all income, refunds, and any disputes, if they arise.

Well I'm not fully sure how tax work in Malaysia so wish her luck tho, I also told her maybe should stop doing it since it's hard to deal with foreign country, what more it's in US.

Can you provide us the website for our "see see"?

I still suspect about this case which is otherwise.

The tax consultant is advised on taxes only..
Still a red flag.

they didn't know or didn't see the "issue"

I think best u get advise from friends who work in accounting firm doing in taxation. They will be more familiarise on that area...