Envato Elements & ENVATO PTY LTD: The Complete Malaysian Withholding Tax (WHT) Compliance Guide for 2024

If your Malaysian business subscribes to Envato Elements — the popular all-in-one design asset platform offering templates, fonts, stock videos, music, and graphic assets — you are likely triggering a Malaysian Withholding Tax (WHT) obligation under the Income Tax Act 1967 that most finance teams overlook entirely. The legal entity behind Envato Elements is ENVATO PTY LTD, an Australian-incorporated company. Every ringgit your business pays to this foreign vendor for access to digital creative assets is legally classified as a software royalty under Malaysian tax law — and that means LHDN expects you to withhold, gross up, and remit tax on every single payment.

This guide breaks down exactly why the obligation exists, how to calculate your gross-up liability correctly, what happens if you ignore it, and how to use the Double Taxation Agreement (DTA) framework and e-WHT portal to stay fully compliant.

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Section 1: The Legal Basis — Why Payments to ENVATO PTY LTD Are Software Royalties Under Section 109

The foundation of Malaysian WHT compliance for digital subscriptions lies in the definition of “royalty” under Section 2 of the Income Tax Act 1967. This definition is deliberately broad and explicitly includes:

• Payments for the use of, or the right to use, any software
• Payments for access to digital intellectual property, including creative works, templates, fonts, and multimedia assets
• Subscription-based licensing arrangements where the underlying IP is owned by a non-resident entity

When your business pays ENVATO PTY LTD for an Envato Elements subscription, you are licensing the right to use thousands of creative digital assets — not purchasing them outright. You do not own the copyright. You do not receive a perpetual licence. You pay a recurring fee for continued access to intellectual property owned and maintained by a foreign entity. This arrangement fits squarely within the Malaysian legal definition of a royalty payment.

Under Section 109 of the Income Tax Act 1967, any Malaysian resident (individual or company) making a royalty payment to a non-resident is legally required to withhold tax at the prevailing rate of 10% before remitting the balance — or in the gross-up scenario, to remit the tax on top of the full payment charged. LHDN’s Practice Note No. 3/2023 further reinforces this classification for digital platform subscriptions, removing any ambiguity about whether SaaS-style creative platforms fall within scope.

ENVATO PTY LTD is an Australian-incorporated entity. Australia and Malaysia have a Double Taxation Agreement in force, which we will address in Section 4. However, the existence of a DTA does not eliminate your obligation to withhold — it may only reduce the applicable rate, subject to strict documentary requirements.

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Section 2: The Gross-Up Reality — Why You Owe Tax Even Though Your Card Was Charged 100%

Here is where most Malaysian businesses are caught off guard. When you subscribe to Envato Elements, ENVATO PTY LTD charges your corporate credit card the full subscription amount — for example, USD 16.50 per month for an individual plan. They do not deduct any Malaysian WHT from your invoice. They charge 100%, and that money leaves Malaysia.

Under Malaysian law, the obligation to withhold sits with the Malaysian payer — you. When the foreign vendor does not reduce their invoice to accommodate WHT, you are required to perform a tax gross-up. This means the tax must be funded from your own pocket, on top of the full amount already paid to the vendor.

Understanding the Gross-Up Formula

The standard 10% WHT gross-up calculation works as follows:

Component	Formula	Example (RM 780/year plan)
Gross Payment to Vendor	Amount charged to card	RM 780.00
Grossed-Up Income Base	Payment ÷ (1 − 0.10)	RM 780.00 ÷ 0.90 = RM 866.67
WHT Payable (10%)	Grossed-Up Base × 10%	RM 866.67 × 10% = RM 86.67
Total Cost to Business	Vendor Payment + WHT	RM 780.00 + RM 86.67 = RM 866.67

This is your true cost of the Envato Elements subscription from a tax-compliance perspective. The gross-up amount of RM 86.67 must be remitted to LHDN — not withheld from the vendor, but paid separately from your business funds. This is a real additional cash cost that must be budgeted and accounted for in your financial planning.

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Section 3: Section 39(1)(f) Risks — The 100% Expense Disallowance Trap

Non-compliance with WHT is not merely a penalty issue — it is a full deduction disallowance risk. Under Section 39(1)(f) of the Income Tax Act 1967, any payment made to a non-resident on which WHT was required but not remitted to LHDN cannot be claimed as a tax-deductible expense.

This means your Envato Elements subscription cost — which you would normally deduct as a business expense against your corporate income tax — becomes 100% non-deductible if the corresponding WHT was never remitted. The compounding financial impact:

• Loss of tax deduction: At a 24% corporate tax rate, every RM 1,000 of disallowed expense costs you RM 240 in additional tax
• 10% late payment penalty: Under Section 107C and relevant penalty provisions, unpaid WHT attracts a 10% penalty on the outstanding amount
• Audit exposure: LHDN has intensified scrutiny of foreign digital platform payments following Practice Note No. 3/2023, making this a live audit trigger
• Retrospective liability: LHDN can assess unpaid WHT for up to 7 years retrospectively under the statute of limitations

For businesses that have been subscribing to Envato Elements for multiple years without remitting WHT, the combined penalty and disallowance exposure can be substantial. Early voluntary disclosure is strongly recommended.

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Section 4: Double Taxation Agreement (DTA) Relief — Can You Reduce WHT to 8%?

Malaysia and Australia have a Double Taxation Agreement (DTA) in force. Under the Malaysia-Australia DTA, royalty payments may qualify for a reduced WHT rate rather than the standard 10% domestic rate. However, accessing DTA relief requires strict compliance with documentary requirements.

To claim DTA relief on payments to ENVATO PTY LTD, your business must:

1. Obtain a valid Certificate of Residence (COR) issued by the Australian Taxation Office (ATO) confirming that ENVATO PTY LTD is a tax resident of Australia for the relevant period
2. Verify the foreign Tax Identification Number (TIN) of ENVATO PTY LTD as registered with the ATO
3. Submit the COR and TIN details alongside your Form CP37 or Form CP37S filing to LHDN
4. Retain all documentation for a minimum of 7 years for audit purposes

Important Guardrail: We do not publish specific TIN numbers or Tax Registration IDs for ENVATO PTY LTD in this article. TIN data and COR documents for foreign vendors must be sourced from verified, up-to-date compliance databases. Incorrect TIN submissions can result in your DTA claim being rejected and the full 10% rate being applied retroactively. See our CTA section below for access to our verified foreign vendor TIN database.

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Section 5: Filing Guide — Form CP37 vs Form CP37S for Envato Elements Payments

Once you understand your liability, the next step is correct filing through LHDN’s e-WHT portal (MyTax). Malaysian businesses have two filing form options for WHT remittance:

Form CP37 — Monthly Filing

Standard WHT remittance form. Due date: within 1 month after the month in which the payment was made. Suitable for businesses making large, irregular, or significant one-off payments to ENVATO PTY LTD.

Form CP37S — Bi-Annual Filing (Recommended for Recurring Subscriptions)

LHDN’s CP37S form is specifically designed for small, recurring payments to the same non-resident vendor — making it ideal for monthly or annual Envato Elements subscription payments. Under CP37S, you consolidate all WHT liabilities for a 6-month period and file twice per year:

• First half (January–June): Due by 31 July
• Second half (July–December): Due by 31 January of the following year

Step-by-Step e-WHT Filing Process

1. Log in to MyTax portal (mytax.hasil.gov.my) using your company’s MyTax credentials
2. Navigate to e-WHT under the “e-Filing” menu
3. Select Form CP37S for recurring Envato Elements subscription payments
4. Enter vendor details: ENVATO PTY LTD, country of incorporation (Australia), payment amounts, and dates
5. Input the verified foreign TIN and attach the Certificate of Residence (COR) if claiming DTA relief
6. Calculate and confirm WHT amount (10% standard or reduced DTA rate)
7. Submit and make payment via FPX or online banking
8. Download and retain the LHDN receipt and acknowledgement for your records

Ensure your accounting team flags all foreign vendor payments at the point of invoice receipt — not at year-end — to avoid missed filing deadlines and the resulting 10% late penalties.

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Section 6: Get Your Verified TIN Data and COR Documents — Act Now

Conclusion: Envato Elements Is Not Just a Design Tool — It Is a Tax Obligation

Every Malaysian business using Envato Elements through ENVATO PTY LTD has a live, enforceable WHT obligation under Section 109 of the Income Tax Act 1967. The subscription cost you see on your invoice is not your true cost — the gross-up WHT liability adds a real additional cash outflow that must be remitted to LHDN on schedule. With the risk of 100% expense disallowance under Section 39(1)(f), 10% late penalties, and multi-year retrospective audit exposure, compliance is not optional — it is commercially essential.

Take action today: verify your filing obligations, obtain the correct TIN and COR documentation for ENVATO PTY LTD, and use Form CP37S to streamline your bi-annual remittance. Your Envato Elements subscription is a deductible business expense — but only if you comply.