The Parliament of Malaysia today has passed the amendment to the tax bill that would allow the government to tax digital services provided by foreign companies. The tax was originally announced back in November during the tabling of Belanjawan 2019 although no actual tax rate was revealed at that time.
Under the Service Tax (Amendment) Bill 2019, these online services provided will be subjected to 6 per cent tax. The taxes will come into effect on 1st January 2020.
According to Astro Awani’s report, the Deputy Finance Minister, Amiruddin Hamzah has stated that the implementation of the tax was to ensure a level playing field. This is because these foreign service providers are currently not subjected to the tax as opposed to local players.
While the intention is certainly at the right place, we do wonder how global players such as Netflix, Spotify, Steam, and others would react to the upcoming tax. All in all, let’s hope that the pricing would not increase much from what we are paying right now.