The Malaysian Insight

PUTRAJAYA is set to tax foreign digital service providers following plans to amend tax-related acts, such as the goods and services tax (GST) and income tax, said Customs Department Director-General T. Subromaniam.

He said the move to internationalise Malaysia’s tax laws was important as it could add billions to the country’s revenue.

“We are amending several provisions under the acts so that we can tax the digital economy… the service providers who reside in other countries, but are providing services here.

“We have no problems with products because of the physical movement in the country, but when it comes to services, it’s intangible,” he said during a press conference at the GST Conference 2017.

He said the targeted total tax collection from the digital economy was yet to be known as the industry was considered new.

“Nobody really knows how big the ‘monster’ is out there. We will only know once we amend the law and look into it in detail. It could run into several billions,” he said, adding that the government aimed to table the amendments in the next parliamentary sitting scheduled next month.

When asked about the type of digital services that would be taxed, he cited e-commerce businesses, such as Alibaba, as an example.

“A lot of people can provide services from outside the country, where the payment is made via credit card and the services are enjoyed here. When the consumers of the services are in the country, we should be able to tax them (the services).

“Once the amendment is made, we will have a legal basis to register them (digital service provides) and tax those services.”

He added the government was on track to collect RM42 billion in GST this year. – September 18, 2017.

Editor’s note: It has been pointed out that Lazada Malaysia is a locally registered service provider and not a foreign company, and is compliant with all of Malaysia’s tax laws.