KUALA LUMPUR, April 8 — The government is planning to impose a digital service tax of six per cent on foreign digital service providers from January 1, 2020, according to Deputy Finance Minister Datuk Amiruddin Hamzah.
He said the rate was deemed the lowest compared to the rate imposed in several other countries.
Russia, for example, has introduced the tax from January 1, 2017, at the rate of 18 per cent, Norway from July 1, 2011, at the rate of 25 per cent, and New Zealand from October 1, 2016, at the rate of 15 per cent, he said.
“They (digital service providers) should have no problem to pay...because it’s only six per cent. If they can comply with Russia, Norway and New Zealand, I don’t see any reason why they should refuse to comply with the rate in Malaysia.”
The deputy minister said this when winding up the debate on the Service Tax (Amendment) Bill 2019 at the Dewan Rakyat here today.
“It’s not fair if only the local digital service providers had to pay the tax. This is not a new tax, it’s just having the scopes extended to providers in other countries,” he said.
Amiruddin said the government has the power to enforce the law even if the digital service providers were in other countries as there exists a government-to-government (GTG) cooperation among countries involved in the Organisation for Economic Cooperation and Development (OECD).
“This cooperation enables us to take legal action against foreign companies which refuse to pay the service tax,” he said.
The Bill was then passed with amendments.
Other Bills passed by the Dewan Rakyat today were the Customs (Amendment) Bill 2019, Free Zones (Amendment) Bill 2019, Sales Tax (Amendment) Bill 2019 and the Excise (Amendment) Bill 2019.
The sitting continues tomorrow. — Bernama