• To level the playing field and to ride the digital wave

Historically, digital taxes for foreign entities have always existed in the form of a 10 percent on services rendered by a non-resident taxpayer to a Malaysian resident, including online advertisements.

However, according to Jeremy Chew the senior content marketer for product metasearch platform, iPrice group, these businesses have often managed to avoid paying taxes in Malaysia by not having a physical presence within the country and only paying taxes where their company is headquartered in.

This loophole has caused a non-level playing field locally as many of these global players are able to provide better and competitive price points for their products and services than our local players who are subjected to local taxes such as the Sales and Service Tax (SST).

Chew believes that the this introduction of a digital tax would not only help level this playing field but also the playing field between online and offline businesses as well.

Additionally, many analysts and local stakeholders have also heralded this move as wise as the present digital economy in Malaysia has been growing rapidly in recent times – presenting itself as a huge potential of revenue for the government.