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Malaysia digital services Service Tax update

  • Aug 11, 2020 | Richard Asquith

On 1 August 2020, the Royal Malaysian Customs Department issued a revised Service Tax digital services guide for non-resident providers.

Effective 1st January 2020, service tax was levied on any digital service provided by a foreign registered person to any consumer in Malaysia. The rate is 6%.  Malaysia has amended the current service tax legislation to make non-residents who provide digital services to consumer liable to be registered. The provider is mandated to be registered when the total value of digital services provided to a consumer in Malaysia exceeds RM500,000 per year.  Check Avalara's global VAT on digital services guide.

Taxable services include:

  • Software, application & video games e.g. downloading of online software, updates and ad-ons website filters, firewalls, provision of mobile applications, online gaming; 
  • Music, e-book and film e.g. provision of music, streaming services, include subscription-based media / membership
  • Advertisement and online platform e.g. offering online advertising space on intangible media platform, offering platform to trade products or services 
  • Search engines and social networks e.g. customised search-engine services 
  • Database and hosting e.g. website hosting, online data warehousing, file-sharing and cloud storage services
  • Internet-based telecommunication e.g. Cloud-PABX, VOIP Phone
  • Online training e.g. Provision of distance learning, e-learning, online courses, pre-recorded webinar
  • Others Subscription to online newspapers and journals, provision of other digital content like images, text, information and payment processing services

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: richard.asquith@avalara.com. He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.
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