We’ve officially entered the new year! And with that also comes the implementation of digital tax on foreign digital services. The tax became effective as of yesterday (1st January 2020). But do you know which digital services will begin taxing you?
Based on Budget 2019, the digital tax will be implemented as a 6% service tax for foreign digital services. In fact, at least 126 foreign digital service providers have already registered for the tax in Malaysia.
Additionally, you already probably use many of these services such as Netflix, Spotify, Google, and Airbnb. However, Netflix and Spotify have yet to make an announcement.
In regards to Google, the tax will be implemented on services they provide such as YouTube Premium. Furthermore, users who make purchases on e-books, applications, and even movies on Google Play will need to pay up that 6% tax.
Moving on, having the digital tax will allow for local and foreign digital service providers to be on more equal ground. Therefore, services from local providers such as telecommunications will not impose the digital tax. The money will be remitted to the Customs Department.
To further clarify, the Ministry of Finance has issued a statement to provide a clear example of which digital services are taxable. These include digital content such as music and e-books, software programmes, electronic data management services, as well as online advertising services.
Moreover, the Royal Malaysian Customs Department (JKDM) is preparing a guideline for users. This will address frequently asked questions. There will also be roadshows to provide more information.
However, if you would like to find out more information then you can call the JDKM call centre. Simply reach out to them at 1300-888-500 for clarification on any questions you may have.