Malaysia ratifies service tax on foreign digital services 2020

Malaysia has ratified the imposition of 6% sales tax on digitial supplies by non-resident providers to local consumers. Unusually, B2B transactions are included, but with relief on the use of reverse charge to prevent double taxation.

The new requirement to charge service tax on e-services (and goods) comes into play on 1 January 2020. Foreign providers can start registering online after 1 October 2019. There is a registration threshold of RMB500,000 per annum. Once registered, tax payers must submit quarterly returns by the end of the following month following the reporting quarter.

Malaysia has left the definition of digital services very vague and wide. So it will include: 

·     Streaming or downloads of media

·     Membership to online sites and clubs

·     E-books and audio books

·     Apps

·     Software

·     Cloud services, including memory

·     Online gambling

·     E-learning, excluding online access to live tutorials

·     Advertising services