digitaltax
What Is Digital Tax?

A 6% service tax will be implemented for digital services in Malaysia from 1st Jan 2020 onwards. The tax is expected to affect streaming services like Netflix and Spotify, digital advertising services offered by corporations like Google, and also digital game distribution companies such as Steam.


What is Digital Tax ?

Starting from 1 Jan 2020, a 6% service tax will be implemented for digital services in Malaysia.

The Service Tax (Amendment) 2019 Bill was approved by Dewan Rakyat to implement tax on foreign registered persons who provide digital services to consumers in the country. Foreign digital service providers have been told to register with the government and comply with the new tax requirement.

Under this new law, those who do no comply with this new tax implementation can be fined up to RM50,000, imprisoned for a term of up to three years, or both, upon conviction.

Characteristics of Service Qualified for Digital Tax:

  • Delivered or subscribed over the internet or other electronic network
  • Delivered through information technology medium (not a physical item)
  • Minimal or no human intervention (automatic procedure that do not depend on human assistance)

Foreign Taxable Person Under Digital Tax:

  • Any person outside Malaysia that is providing direct digital services to a consumer
  • Any person outside Malaysia who operates an online platform for purchasing and selling of goods

How Digital Tax Affect You As The Buyer?

  • Digital tax only effects overseas sellers and online services that require payment to be made to foreign company.
  • This includes, mobile apps that are purchased from Apple Store or Google Play Store. Also software, music, videos that are paid and subscribed for from foreign companies like Netflix and Spotify.
  • Digital tax will be collected from consumers when they swipe their credit cards which will remit it to the Customs. At this point of time, no information has been given on other modes of payment.

What Is Affected By Digital Tax?

Digital Products

Digital Services

Content Providers

Not Affected

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