Google to im­pose 6% dig­i­tal tax

The Borneo Post (Sabah) - - Front Page -

KUALA LUMPUR: Google will start charg­ing a six per cent dig­i­tal tax for its paid ser­vices in Malaysia from Jan­uary 1, 2020.

This is in line with the ex­pan­sion of the Sales & Ser­vice Tax legislatio­n in Malaysia to cover dig­i­tal ser­vices.

The search gi­ant has just sent out no­tices to all Google G Suite users about the change. Ac­cord­ing to their email, the amount of Ser­vice Tax will be charged on your pur­chase and it will be vis­i­ble un­der a sep­a­rate line in Trans­ac­tions un­der “Billing & Pay­ments”. The amount of ser­vice tax charged will also be re­flected in the in­voice.

Google also high­lights that Malaysian busi­nesses that have been charged Malaysia Ser­vice Tax by a reg­is­tered for­eign ser­vice shall not be re­quired to self-ac­count for Ser­vice Tax on the same trans­ac­tion by way of re­verse charge. For fur­ther read­ing on dig­i­tal ser­vice tax, you can re­fer to the of­fi­cial guide on the Royal Malaysian Cus­tomers Depart­ment web­site.

Apart from G Suite, other paid dig­i­tal ser­vices in­clud­ing video, mu­sic and app pur­chases will be sub­jected to the tax start­ing next year. It is likely that other Google ser­vices in­clud­ing Google Drive, YouTube Pre­mium and YouTube Mu­sic will be im­posed the same dig­i­tal tax. The dig­i­tal tax was first an­nounced dur­ing the 2019 bud­get an­nounce­ment and the Min­istry of Fi­nance has later con­firmed dur­ing the 2020 bud­get tabling that the six per cent dig­i­tal tax will be im­posed be­gin­ning Jan­uary 1, 2020.

The Ser­vice Tax Act 2018 amend­ment covers “for­eign ser­vice providers” who sell goods or pro­vide ser­vices in Malaysia. The pur­pose of the amend­ment is to level the play­ing field for lo­cal busi­nesses while also gen­er­at­ing more rev­enue for the Malaysian Gov­ern­ment from busi­nesses that are not based in Malaysia.

It was re­ported that Malaysia can gain RM2.4 bil­lion a year from the dig­i­tal tax.

Ac­cord­ing to the Gov­ern­ment, the six per cent dig­i­tal tax rate is con­sid­ered low com­pared to other coun­tries. The dig­i­tal tax rate is 25 per cent in Nor­way, 20 per cent in Rus­sia, 15 per cent in New Zealand, 10 per cent in Aus­tralia, 10 per cent in South Korea and 7.7 per cent in Switzer­land.

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