AI Notetakers & Malaysian Withholding Tax (WHT): Compliance for Read AI, Fireflies & Otter

In modern corporate setups across Malaysia, automated meeting assistants like Read AI and ProTaker AI have become indispensable tools. These AI bots automatically join video calls on Zoom, Microsoft Teams, or Google Meet to record meetings, generate transcripts, and summarize action items.

However, when your finance or admin team pays these monthly software subscriptions via corporate credit card, many overlook an important local compliance requirement: Subscribing to foreign AI meeting assistants triggers mandatory Malaysian Withholding Tax (WHT) under Lembaga Hasil Dalam Negeri (LHDN).

In this guide, we cover the tax classification of AI notetaking tools, highlight other popular AI meeting assistants used in corporate environments, and show how to handle filing and vendor Tax Identification Numbers (TINs).

1. Why AI Notetaker Subscriptions Incur Withholding Tax

Under Section 109 of the Income Tax Act 1967 (ITA 1967) and LHDN’s Practice Note No. 3/2023, cross-border payments for Software-as-a-Service (SaaS), digital licensing, and cloud platform access are classified as software royalties.

When you subscribe to platforms like Read AI, ProTaker AI, or Otter.ai, you are acquiring a commercial license to access proprietary cloud algorithms and AI transcription models hosted on foreign servers.

Key Tax Realities:

• Absorbed WHT (Tax Gross-Up): Overseas SaaS providers do not deduct local Malaysian tax at checkout. Your business must calculate the standard 10% Withholding Tax and pay it directly to LHDN out of pocket.
• Risk of Expense Disallowance: Under Section 39(1)(f) of the ITA 1967, if WHT is not remitted to LHDN, auditors can completely reject your AI software expenses as tax-deductible operational costs.
• Late Penalties: Late or missing WHT payments incur an automatic 10% penalty from LHDN on the unpaid tax balance.

2. AI Notetaking Platforms in the Market

Besides Read AI and ProTaker AI, many other AI meeting assistants, note-taking bots, and AI productivity workspaces operate under the same foreign vendor tax rules:

• Fireflies.ai (FIREFLIES.AI CORP.): A popular AI meeting bot that integrates with calendar schedules to record, transcribe, and search voice conversations.
• Otter.ai (Otter.ai, Inc.): A widely adopted AI real-time transcription and automated meeting note assistant.
• Fireflies / Notetaker integrations in Notion (NOTION LABS, INC.): AI workspace tools that summarize meeting notes, documentation, and database content.
• Fathom AI & Fellow.app: Specialized meeting management software for teams and executive workflows.

3. Vendor Profiles & Tax Data Reference

When recording foreign vendor profiles in accounting software (such as SQL Account, AutoCount, Xero, or QuickBooks) or preparing LHDN tax statements, accurate legal entity names and foreign Tax Identification Numbers (TINs) are required:

AI Software Tool	Foreign Operating Entity	Jurisdiction	Tax Profile / Identifier
Fireflies.ai	FIREFLIES.AI CORP.	USA	US EIN (Federal Tax ID)
Otter.ai	Otter.ai, Inc.	USA	US EIN (EFIN/TIN 81-2445246)
Notion AI	NOTION LABS, INC.	USA	US EIN (Federal Tax ID)
Read AI	Read Life Inc.	USA	US EIN (Federal Tax ID)
ProTaker AI / General SaaS	Non-Resident Foreign Entity	Overseas	Foreign Registration / Tax ID

4. How to Submit WHT for AI Notetakers (Form CP37 vs. CP37S)

Remitting Withholding Tax on foreign software platforms is managed online via LHDN’s MyTax Portal (mytax.hasil.gov.my) using the e-WHT system:

1. Convert & Calculate: Convert the foreign subscription charge on your credit card statement into Ringgit Malaysia (MYR) and calculate the 10% tax liability.
2. Apply Bi-Annual Small-Value Relief (Form CP37S): If the Withholding Tax amount on a single recurring AI subscription invoice is RM500 or less (which covers almost all standard Read AI, ProTaker, Fireflies, or Otter monthly plans), LHDN permits companies to batch and submit these payments twice a year—by July 30 (for Jan–Jun payments) and January 30 (for Jul–Dec payments).
3. Submit via e-WHT: Input the foreign vendor’s legal entity name and foreign tax identifier on Form CP37/CP37S, pay via FPX online corporate banking, and archive the payment receipt for 7 years.