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Malaysia SST on foreign e-services 2019

  • GST
  • 07 November 2018 | Richard Asquith

Malaysia is to extend Sales and Services Tax liabilities to non-resident providers of electronic services. B2B transactions will liable to SST from 1 January 2019, and B2C supplies from the start of 2020.

Currently, online domestic suppliers of digital services are subject to the tax meaning they have an uncompetitive tax position.

Services coming under the new rules include: downloads/streaming media, subscriptions to online membership sites, e-books, online news/journals, apps, software and advertising services for online marketplaces.

Non-resident providers will have to register with the Customs Department before 1 January 2019. Currently, the Inland Revenue Board classified digital marketing payments to non-resident companies as royalty income and liable to pay Withholding Tax (WHT). This may create a double taxation liability, although B2B SST transactions may be classified under the ni-rated reverse charge.

SST replaced the 6% Goods and Services Tax in September 2018.

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 is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.