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