Calls for tax on Google, Facebook gaining speed

DPM to raise the matter in weekly Cabinet meeting

PETALING JAYA: Calls to impose a tax on Google and Facebook have gained speed as the Internet giants guzzle an increasing amount of digital advertising revenue.

The issue of a tax on such revenue was brought up by Malaysian media companies with Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi on Tuesday, with Zahid saying he would raise the matter of a tax on Google’s and Facebook’s advertisements in the weekly Cabinet meeting held every Wednesday.

He was responding to a proposal by Star Media Group Bhd group managing director and chief executive officer Datuk Seri Wong Chun Wai’s proposal that the Government tax Google and Facebook advertisements during a luncheon dialogue on Tuesday.

Wong and many senior media executives have voiced their dissatisfaction over how Google, mainly known as a search engine company, and Facebook, a social media firm, have monopolised the lion’s share of digital advertising revenue despite a large portion of the content on their sites being generated by the media.

According to Wong, 70% of the advertisement revenue on digital platforms go to Google and Facebook with the remainder shared by the rest of the media industry.

Meanwhile,MalaysianAssociation of Tax Accountants president Datuk Abd Aziz Abu Bakar was quoted by Berita Harian as saying that the Government should tax these foreign firms but the tax needed to be refined and examined carefully before implementation.

Abd Aziz noted that there needed to be strong justification for the tax before its implementation and that there must be fairness in its implementation.

Last November, local media firms formed the Malaysia Premium Publishers Marketplace, which then formed an exchange in February to offer digital advertising from members as a pushback against the impact that Google and Facebook have on digital advertising.

Marketing magazine publisher Harmandar Singh, who has been following the issue, said nothing concrete has come out of the efforts in the proposal to tax these internet giants’ advertising revenue.

“Nothing official has been said so far,” he confirmed, adding that government officials were still figuring out how to tax these companies.

Last September, Royal Malaysia Customs Department director-general Datuk Seri Subromaniam Tholasy said there were plans to amend the Goods and Services Tax (GST) Act 2014 in order to tax these foreign digital firms. No such amendments have been made to the GST Act in the current parliamentary session.

Harmandar said taxing the advertising revenue of these digital firms would give a truer picture of online advertising pricing. “These companies offer services, are they paying GST?” he asked.

“There are a number of grey areas that we feel the Finance Ministry should look into. We want fair competition, a level playing field for everybody, justified costs and transparency,” Harmandar, also the honourary advisor to the Malaysian Digital Association, said.

Meanwhile, Google Malaysia has not been approached by Finance Ministry officials regarding the latest taxation proposal on its advertisements, said Google Malaysia communications and public affairs head Zeffri Yusof.

In an official reply, Google Malaysia said: “We pay all taxes we owe in Malaysia, and we work regularly with the Government on a range of issues.”