DIGITAL PINCH

The 6% digital tax on overseas-based digital services from Google, Facebook and Airbnb will come into effect on Jan 1. Small-time business owners say they will feel the pinch while some consumers will wait and see how the tax will affect them.

PETALING JAYA: Small-time business owners say they will feel the pinch of the 6% digital tax while some consumers say they have to wait and see how the tax will affect them.

Vincent Teh, who runs a business consultancy firm, said the digital tax will be a burden to small-medium enterprises (SMEs) or startups.

He estimated that he would have to pay an additional RM200 or RM300 a year for his business to use services from Google, Facebook and Instagram.

“The smaller companies can’t get customised systems so we rely on Google’s G-suite services, Facebook advertisements, social media. We will feel the squeeze because we rely on all of this.

“Start-ups and SMEs should be exempted, especially in this economic climate,” said the 32-yearold.

Another entrepreneur Brian Tang, who is a founder of an education start-up, said the digital tax will run up the costs of his business.

“We run our servers on Amazon

Web Services (a cloud computing platform), and it is not a trivial sum each month. Adding 6% on top of that is a cost we have to bear.

“Also, as a small startup, my customer acquisition costs will go up. I don’t put in a lot into Facebook advertisements, and this tax definitely deters me more from doing so,” said the 28-year-old.

Consumers of digital entertainment are also readying themselves for a possible increase in prices, should service providers pass the extra costs to them.

Church worker Danielle Cheng said she will be waiting for further clarification from online entertainment providers about the digital tax.

“I will wait for notification of price increases. I think it demonstrates responsibility on their part to inform customers if they are expected to pay extra.

“If it does increase, it may be burdensome for some to pay more. However it is not unexpected as that is how some other digital businesses have responded to the tax,” said the 26-year-old.

Content writer Aisyah Nabilah Suwardi, 27, said that she does not think a tax rate will deter her from enjoying online entertainment services.

“I wouldn’t feel reluctant paying it, I have a stable income and online entertainment is one of the few things I’m paying regularly, so for me it is alright.

“However, I feel the tax rate could be lower at 3% to start with. Tax rates can always go higher, but they never go lower,” she said.