Malaysian Consumers Are Worried Over Digital Tax

Malaysian Consumers Are Worried Over Digital Tax

The government’s announcement to amend the taxation system and include digital tax has left many Malaysian consumers concern.

Currently online products sold on e-commerce platforms such as Lazada, Shopee and 11Street have already included the goods and services tax (GST). But the amended digital tax, which may be implemented next year, could raise the issue of double taxation.

However, Deloitte Malaysia Indirect Tax Partner, Senthuran Elalingam said the new form of tax would only affect foreign service providers, namely those businesses that had no establishment or place of business in Malaysia.

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GST only applies to businesses that are established or fixed within the country, while those operating outside of Malaysia were not subject to the tax. But with the implementation of the digital tax, this may mean that foreign service providers serving Malaysian consumers may be charged with tax.

Senthuran further explained that from the consumer’s perspective, digital services would be subject to the tax once the law takes effect, and if the service provider decides to pass on the tax by adding it to their existing price, then yes the price would increase. However, this would be a commercial decision based on several factors and may vary from business to business.

To-date, the guidelines for the new tax have yet to be determined, and both consumers and online service providers would have to wait for the announcement to be made.

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