‘Mech­a­nism to tax tech firms must be re­viewed’

New Straits Times - - NEWS -

PU­TRA­JAYA: Malaysia should im­pose tax on tech­nol­ogy and so­cial net­work­ing gi­ants, such as Google and Face­book, con­sid­er­ing the profit they make through dig­i­tal ad­ver­tis­ing in the coun­try, said the Malaysian As­so­ci­a­tion of Tax Ac­coun­tants (Mata).

Mata pres­i­dent Datuk Abd Aziz Abu Bakar said based on the prin­ci­ples of tax jus­tice, the com­pa­nies should be taxed, but the im­ple­men­ta­tion of the mech­a­nism must be stud­ied and re­viewed first.

He said many fac­tors had to be taken into ac­count, in­clud­ing reg­u­la­tions and the mech­a­nism’s im­ple­men­ta­tion, to en­sure that the process was thor­ough.

“We need a strong mech­a­nism and reg­u­la­tions. It is not im­pos­si­ble to im­pose tax on the com­pa­nies, but I don’t think it can be im­ple­mented in the near fu­ture.”

He said tax mat­ters must be re­ferred to the In­come Tax Act 1967.

“When the act was de­signed, there were no on­line busi­nesses and so­cial me­dia. As such, changes must be made.”

He was com­ment­ing on a pro­posal by Star Me­dia Group Bhd man­ag­ing di­rec­tor and chief ex­ec­u­tive of­fi­cer Datuk Seri Wong Chun Wai that the gov­ern­ment should im­pose tax on Google and Face­book as they con­trolled nearly 70 per cent of dig­i­tal ad­ver­tise­ments in Malaysia.

Wong sug­gested this to Deputy Prime Min­is­ter Datuk Seri Dr Ah­mad Zahid Hamidi at a talk ses­sion with se­nior edi­tors and pub­li­ca­tion per­mit hold­ers on Tues­day.

Zahid said he would raise the mat­ter in the cab­i­net.

Aziz said it was im­por­tant to de­ter­mine Google and Face­book’s in­come to ease tax­a­tion.

“Google and Face­book have no per­ma­nent es­tab­lish­ment in the coun­try. A com­pany or en­tity that can be im­posed with tax in Malaysia must have a per­ma­nent es­tab­lish­ment here.

“They do have branches in the coun­try and the busi­ness com­mu­nity here pays them for dig­i­tal ad­ver­tis­ing, but we are not sure about their in­come. Do they get roy­alty? Do the trans­ac­tions hap­pen in Malaysia?

“That’s why we need a study to en­sure that the tax im­ple­men­ta­tion mech­a­nism will ben­e­fit the coun­try.”

The In­land Rev­enue Board (IRB) said there was no pro­vi­sion re­lat­ing to tax on dig­i­tal ad­ver­tis­ing.

IRB chief ex­ec­u­tive of­fi­cer Datuk Seri Sabin Sami­tah said the is­sue of dig­i­tal ad­ver­tis­ing pay­ments would be de­ter­mined based on the facts of a case as well as the In­come Tax Act 1967.

Newspapers in English

Newspapers from Malaysia

© PressReader. All rights reserved.