KUALA LUMPUR,— At least 126 foreign digital service providers including Google, Netflix, Spotify, Airbnb have registered with the government for the 6 per cent digital tax to be imposed from January 1, the Customs Department has confirmed.
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Local daily The Star cited a Customs spokesman as confirming the list as of December 20, with other companies to be invited to register.
“As of now, we do not know how many foreign companies are eligible, so the implementation of the tax will be based on the soft approach.
“This means we will provide notices inviting such companies to register for the tax, should the company reach the threshold,” the spokesman was quoted as saying by the paper.
Foreign companies providing digital services are required to register with the Customs Department for the digital tax if the value of such services to Malaysian consumers exceed RM500,000 a year.
Digital services are categorised by the Customs Department as including software, applications, video games, online subscriptions, streaming services, online advertisements, online trading platforms, online training, payment processing services, search engines and social networks, database and hosting services and internet-based telecommunication.
According to The Star, tax advisory firm Axcelasia Taxand director Brynner Chiam said the digital tax on foreign digital service providers was unlikely to be significant as Malaysian households spend less money on such services as compared to tangible goods.
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Chiam also noted the Malaysian Communications and Multimedia Commission’s 2018 survey findings of relatively low e-commerce adoption among Malaysian consumers at 51.2 per cent.
Google has already announced it would impose the 6 per cent digital tax on its G Suite users and Facebook will also be doing similarly for advertisements on its platform. Sony’s PlayStation Store will also be applying the tax to its subscription services and purchasable items.
The digital tax is currently already imposed on local digital service providers, with Deputy Finance Minister Datuk Amiruddin Hamzah previously explaining that the tax is merely being extended to foreign companies.
Amiruddin had also told the Dewan Rakyat in April that the 6 per cent rate for digital tax in Malaysia was the lowest when compared to other countries namely Norway (25 per cent), Russia (18 per cent), and New Zealand (15 per cent) with such taxes introduced in July 2011, January 2017 and October 2016 respectively.
It was previously reported that the digital tax could boost the Malaysian government’s tax revenue by RM2.4 billion a year.
-Yahoo News