Are You Running An Online Business? You Need To Pay TAXES Too!
The Internet has not only changed the way we communicate with each other, it has also opened doors to new opportunities to earn more money. Blogging, used to be a hobby, has not become an avenue to earn side income, and for some, it has become their main source of income.
With Facebook, even stay-at-home parents are able to help with the family finances by selling products online. Many e-commerce sites started with selling products on Facebook, blog, and finally, a formal website.
Though these e-commerce activities used to be in the gray area when it comes to income tax filing, especially if they are not registered with Companies Commission of Malaysia (SSM). However, with the publication of a tax guideline for e-commerce by the Inland Revenue Board of Malaysia (LHDN), things have become clearer cut.
According to LHDN, all payments and benefits received from the carrying on of blogging, advertising and any other activity performed on online, including social media platforms, as a trade or business constitute gains or profits from a trade or a business. However, those who are involved in such activities can still opt to file for individual or business tax.
If you are earning more than RM34,000 in a year, you will be taxed under the business rates, which is higher than individual tax rates. Both have different tax reliefs claimable too.
This will effectively change how bloggers and small-time online sellers manage their accounts and tax filing.
Here, we have outlined some facts about taxes as an online entrepreneur that can help with your queries and ease your tax worries.