– best op­tion for e-com­merce

> Ex­perts cite ac­tion will en­able Malaysia to cap­ture higher taxes on on­line/ebiz transactions

The Sun (Malaysia) - - SUNBIZ - BY LEE WENG KHUEN

KUALA LUMPUR: Im­pos­ing with­hold­ing tax on busi­nesses in the dig­i­tal econ­omy could be the best op­tion at a time when Malaysia wants to cap­ture higher taxes on e-com­merce transactions, ac­cord­ing to tax ex­perts.

Grant Thornton Malaysia’s head of tax ad­vi­sory and in­ter­na­tional tax Daniel Woo said the with­hold­ing tax mech­a­nism ide­ally should be the fi­nal tax but op­tion should be al­lowed to reg­is­ter and file for net tax­a­tion.

“The cur­rent with­hold­ing tax pro­vi­sion may also need some adap­ta­tion, if not it can­not cover prop­erly and not rel­e­vant to the dig­i­tal econ­omy,” he said at the Malaysian Tax Con­fer­ence 2018 or­gan­ised by the Malaysian In­sti­tute of Ac­coun­tants and the Malaysian As­so­ci­a­tion of Tax Ac­coun­tants yes­ter­day.

The In­land Rev­enue Board’s (IRB) ecom­merce divi­sion di­rec­tor Ab­dul Aziz Kechik con­curred, say­ing that it is the best op­tion for the time be­ing.

“For with­hold­ing tax, they (busi­nesses) don’t need to sub­mit any­thing and we can straight­away tax them. With dig­i­tal­i­sa­tion, we want to broaden the with­hold­ing tax scope.”

He said IRB is still re­view­ing the ecom­merce guide­lines, but de­clined to com­ment fur­ther.

Woo opined the ideal with­hold­ing tax rate is be­tween 10% and 15%.

“You can­not set too high or too low. If it is too high, the peo­ple will find ways to avoid it.”

He high­lighted that the tax au­thor­ity can­not take a gen­eral ap­proach to im­pose the with­hold­ing tax on dig­i­tal transactions, fail­ing which will hin­der the dig­i­tal econ­omy de­vel­op­ment.”

“We need to look at the con­cep­tual and prac­ti­cal as­pects in ap­ply­ing the with­hold­ing tax.”

With the im­po­si­tion of with­hold­ing tax, for­eign busi­nesses must reg­is­ter with the lo­cal tax au­thor­ity so that they can claim the credit to their home coun­tries.

Mean­while, IRB CEO Datuk Seri Sabin Sami­tah ear­lier said in his key­note ad­dress that the tax au­thor­ity will strike a bal­ance be­tween sup­port­ing the new emerg­ing dig­i­tal econ­omy and at the same time en­sur­ing the right to tax and col­lect the right amount of tax.

“Tax au­thor­i­ties are look­ing at the best mech­a­nism to tackle the (dig­i­tal econ­omy) is­sue, with the pri­mary ob­jec­tive of safe­guard­ing the tax base and rev­enue due to the coun­try.”

The dig­i­tal econ­omy is pro­jected to ac­count for 45% of Malaysia’s gross do­mes­tic prod­uct by 2021 against a mere 7% in 2017.

Sabin also said that IRB is ex­pected to con­trib­ute 42.6% to the coun­try’s to­tal bud­get needed this year, which trans­lates into RM134.71 bil­lion as an­nounced in Bud­get 2018.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.