The government is looking into a new tax model for internet giants and social media platforms like Google and Facebook. The move is said to be due to the amount of control these companies have over the online advertising space in Malaysia.
Second Finance Minister Johari Abdul Ghani said the government is currently conducting a detailed study on how to go about taxing such corporations, and is looking into the best taxation mechanisms. He also implied that the tax will almost certainly be implemented, saying that it is a matter of necessity.
Technology giants are said to control some 70% of digital advertising expenditure in Malaysia; although they are already subject to the same taxes as other companies. However, it would appear that the government is interested in increasing its income from this space.
Google and Facebook have also faced international criticism for shifting profits to countries with lower tax rates; supposedly leading to them not paying their fair share in certain locations. The move is not entirely illegal, but it has raised ethical questions – especially in the European Union.
Facebook for one, has been subject to investigations for declaring its operational profits in the Republic of Ireland. Where corporate income tax is lower than the rest of the EU, and also where it was given tax breaks by the Irish government. The company was later ordered to pay back taxes to the Irish by the European Commission.
[Source: The Star]